How Does a Revocable and Irrevocable Trust Differ?
A revocable trust in Massachusetts, sometimes called a living trust, is an adaptable and flexible legal document that allows you to manage and control your assets while alive and then distribute them, as you intend, after your death.
As the living “grantor,” who creates your trust with your lawyer, you can modify, change, or revoke the trust at will and at any time in your life as long as you are mentally competent.
Some of the critical aspects and benefits of a revocable trust are:
- You have complete control of your assets – While alive, you maintain full control of all your trust assets and can manage them however you wish.
- It helps you to avoid probate – After you’re gone, your revocable trust will distribute assets directly to your beneficiaries, heir, etc. Usually, it can bypass the costly and time-consuming court process known as probate if you have properly funded the trust during your lifetime.
- It keeps your information private – In most cases, the contents of your revocable trust aren’t public knowledge, so your family’s financial affairs remain private.
- It offers a high degree of flexibility – While alive, you can add or remove the trust holdings, change beneficiaries, remove and add assets, etc., at any time.
- It can reduce or eliminate estate taxes You can incorporate estate tax minimization strategies into your trust.
On the other hand, once an irrevocable trust is put into place, this type of trust cannot be changed, amended, or revoked (with very limited exceptions). Additionally, when you transfer assets into your irrevocable trust, in most cases you no longer have ownership or control over any trust assets.
However, an irrevocable trust still has other significant benefits, such as protecting assets or minimizing estate taxes. So, depending on your unique family and financial situation, your skilled, knowledgeable, and diligent trust lawyer will always comprehensively analyze your future goals and decide which trust best fits your needs.
How Does a Revocable Trust Work in Massachusetts?
When you and your lawyer create a revocable trust, you will transfer the ownership of your assets, such as your home, personal belongings, art collection, bank accounts, investment accounts, etc., into the trust. This will provide numerous benefits for you and your beneficiaries. You still control all your valuable and meaningful things in one “special box.”
Usually, one of the best facets of a revocable trust is that you can change or get rid of it whenever you wish. It’s enormously flexible, and after you draft the trust, you also get to choose who will take care of it after you’re gone. This person is known as the “trustee.”
Additionally, you get to decide who will inherit all your assets, valuables, etc. while you are alive. Commonly, if you are married and one of you isn’t around anymore, all your assets will go to the other person; however, a revocable trust can be altered at any time to fit a new situation.
Your trust can also be organized so that after you’re gone, the person in charge distributes your assets to the people who are supposed to receive them and then closes the trust.
With this valuable legal tool, the variables for your future planning are almost endless. However, to fully understand its uses and value, the empathetic advice and guidance of a tenacious and experienced estate planning lawyer is mandatory.
What Are Some Possible Negative Aspects of a Revocable Trust?
If you’re considering estate planning, you must have professional legal guidance to decide on the best legal tool (such as a revocable trust) that fits your needs and future family goals.
A revocable trust provides a smooth transfer of assets to beneficiaries after death with minimal delays and costs associated with probate. However, its numerous benefits may still not apply to your unique situation.
For example, some of the “cons” of a revocable trust are:
- Ongoing management of the trust – If you wish to benefit from a revocable trust fully, you must ensure that all assets are appropriately titled in the trust’s name. This usually requires ongoing management and attention, especially when things change.
- Minimal income tax advantages – Revocable trusts have myriad benefits; however, they usually don’t provide significant income tax advantages. If this is an issue for you and your family, then an irrevocable trust might need to be considered.
- It may have the potential for trustee disputes – Let’s say you become incapacitated and a successor trustee takes over your revocable trust. This could sometimes lead to conflicts between the trustee and your heirs and beneficiaries.
- Revocable trusts may add complexity to simpler estates – If you have a relatively simple estate and straightforward plans for its distribution, a revocable trust might add unnecessary complexity.
Like most legal tools, revocable trusts must be professionally drafted to coincide with your personal, financial, and future goals. Although a revocable trust may greatly benefit you and your family, only a qualified estate planning lawyer can provide the clear options and facts you need to decide on the correct legal tool to achieve these goals.
How Do I Know If a Revocable Trust is Right for Me and My Family?
As stated, revocable trust is a sound and valuable legal tool, but it isn’t the only estate planning tool you may need, and it’s not right for all circumstances.
In some families, a professional, well-drafted Will combined with specific other estate planning documents may be enough. Other families may benefit from a combination of a revocable trust, a sound Will, powers of attorney, and health care directives.
So, it entirely depends on your unique set of circumstances. Suppose you want to avoid probate, protect your privacy, plan for incapacity, or provide for loved ones in particular ways. In that case, a revocable trust may be an invaluable part of your comprehensive estate plan.
But you must remember that Massachusetts estate planning laws can be extremely legally complex. If you want the best outcome possible, it’s critically important to get trusted legal estate planning guidance to ensure your plan meets your unique goals and fully complies with state and federal laws.
I Need More Information About Revocable Trusts; How Should I Proceed?
Always remember that no template or one-size-fits-all plan may solve all your private and unique needs regarding a strategically drafted and executed estate plan.
However, suppose you wish to consider a revocable trust or another type of legal tool. In that case, the prudent and wise thing to do is to work with a skilled, empathetic, and knowledgeable estate planning lawyer. Your well-versed lawyer will provide you with all your options about protecting your assets and your family’s future; their work is to guide and help.
The Massachusetts estate planning lawyers at Simmons & Schiavo, LLP will effectively and clearly answer your questions and create a strategically drafted plan that reflects your wishes and brings you peace of mind. They are passionate about prioritizing long and meaningful relationships with all their clients and will tirelessly strive to draft a designed estate plan that fits your personal and specific goals.
Call them today at (781) 675-1315 and schedule a consultation and take the first step toward a secure future for you and your loved ones.
