The estate planning process is one that’s often complex, but it’s a critical task for you and all adults. One of the most important parts of estate planning is ensuring that the assets you have are passed down to your beneficiaries based on your wishes. Your estate plan is how you can make this happen.
As you’re working through creating your estate plan, you may wonder how you can make the transition of those assets as easy as possible. One option for this is through trusts.
What is a trust?
A trust is a legal entity that holds assets until they’re passed down to your beneficiaries after your death. There are two different categories of trusts: revocable and irrevocable.
You can change the terms of a revocable trust, and you can cancel the trust if necessary. That’s not the case with irrevocable trusts, which can only be changed or canceled unless you have the permission of the beneficiaries or the court.
You can continue to control the assets in the revocable trust, but a trustee takes over control once an irrevocable trust is funded. Because you don’t have control over the assets in an irrevocable trust, your creditors can’t claim those to satisfy debts. They can potentially claim funds from a revocable trust.
Other factors may impact which of these trusts is best for your situation. Working with someone familiar with your wishes and how to make those a reality may take some of the stress out of the situation. It’s best to do this as soon as possible so you can rest assured that your loved ones are cared for in the best manner possible after you’re gone.
