Irrevocable vs. Revocable Trusts and Estate Planning: What’s the Difference?

For many, trusts and estate planning go hand-in-hand.

When it comes to trusts and estate planning though, there are some things everyone should know.

Everyone has heard of trusts. However, many associate them only with the ultra-wealthy. Yet, that’s not accurate. Trusts are very often part of a well-crafted estate plan. And an estate plan is something anyone 18 and older with significant assets needs for their family’s safety and wellbeing. Significant assets can include a home, a business, automobiles, boats, 401k savings, bank accounts, IRAs, digital assets, and more.

An estate plan is integral when planning for end of life and/or unforeseen events that render one incapable of making important decisions.

Trusts are legal tools which gives individuals, families, and businesses a way to manage and distribute their assets. Two of the most common types of trusts are irrevocable and revocable trusts. While both serve similar purposes, they differ significantly in terms of flexibility, control, and tax implications.

A revocable trust allows the grantor (the person who creates the trust) to retain control over the assets within the trust.

The grantor can modify, revoke, or amend the trust at any time during their lifetime. This type of trust provides flexibility, as it can be changed as circumstances evolve. One of the main benefits of a revocable trust is that it avoids probate. Instead, assets pass directly to beneficiaries upon the grantor’s death. However, since the grantor retains control, assets in a revocable trust are still considered part of the grantor’s estate for tax purposes.

Unlike the revocable trust, an irrevocable trust cannot be altered or revoked once established without the consent of the beneficiaries.

Once assets are transferred into an irrevocable trust, the grantor relinquishes ownership and control. This offers benefits such as potential tax savings, since the assets in an irrevocable trust are typically removed from the grantor’s taxable estate. It also provides greater asset protection since creditors generally cannot access assets in an irrevocable trust.

Creating a well thought out trust and estate plan and choosing the right kind of trust depends on your individual financial goals and priorities.

When you are ready to start creating your estate plan, give our office a call at (470) 235-7868. We’ll explain bot revocable and irrevocable trusts in greater detail and help you determine which is best for your individual goals.

Looking to find an experienced estate lawyer in the Georgia area who is skilled in asset protection and estate plan preparation? Shannon Pawley is an attorney in Georgia with expertise in estate planning and asset protection. Shannon can provide assistance with creating an estate plan to include making a will and how to establish a trust properly. If you have questions about asset protection or questions about making an estate plan, reach out to Shannon and she will be glad to help answer all the estate planning questions you might have!