If you’ve worked hard to achieve your current position in life, whether by starting a business, owning property, or making sound investments, it’s important to consider the future and how you want your assets to be distributed. One option is to establish a living trust, a legally binding document that safeguards your assets while you’re alive and provides for your loved ones after your passing. In essence, you transfer your assets into the trust and name a trustee (which can be yourself) to oversee the trust property and manage your estate for your benefit during your lifetime, as well as to distribute those assets after your death. Contact a Honolulu probate attorney today to get help with your trusts.
Revocable vs. Irrevocable Living Trust:
Living trusts come in two types: revocable and irrevocable. While each has its benefits and downsides, it’s essential to understand the main differences between them.
Flexibility is one of the significant advantages of a revocable living trust since you can change or even revoke the trust entirely if your circumstances or finances change. In contrast, an irrevocable living trust is less flexible and requires court or beneficiary approval for any changes. Ownership is another distinguishing factor; in a revocable living trust, the person who created the trust maintains ownership or control over the assets, while the assets in an irrevocable trust belong to the trust itself. On the other hand, an irrevocable trust offers better asset protection against creditor claims, whereas assets in a revocable trust are still owned by the individual.
Another important aspect to consider is tax savings. Once assets are transferred to an irrevocable living trust, they are no longer considered part of the individual’s taxable estate, meaning beneficiaries may pay less estate tax after the individual’s death. This benefit is particularly significant for individuals with more extensive assets or estates. While irrevocable trusts offer tax savings, revocable trusts are generally the better choice if you do not need to worry about creditors since they provide more control and flexibility.
Final thoughts:
Estate planning is a crucial step to safeguarding your loved ones’ future and ensuring your long-term wishes are fulfilled. Deciding between a revocable or irrevocable living trust and other estate planning matters can be challenging, but a Honolulu probate attorney can provide the guidance you need. They can help you weigh the benefits and drawbacks of each option and create a customized plan that meets your unique needs. Whether you’re starting from scratch or updating an existing estate plan, a probate attorney can offer invaluable advice and support.
