Differences Between a Revocable and Irrevocable Trust
There are many differences between a revocable and irrevocable trust, commonly known as a living trust. The main difference between these two types of trust is that you can only modify an irrevocable trust under very specific circumstances, such as with the beneficiaries’ consent or court approval, while you can modify a revocable trust (if you created the trust) any time you wish.
Trusts are among the most powerful estate planning tools that can help you manage and distribute your property. While you can use both irrevocable and revocable trusts in your estate plan, they have significant differences that will affect how they work and protect your assets. You should understand these differences so you can make more informed choices for your financial future. To help you determine the best option for your needs, consult with a Harrisburg, PA, estate planning lawyer who can evaluate your specific situation.
How an Irrevocable Trust Differs From a Revocable Trust in Pennsylvania
The key differences between an irrevocable and revocable trust include the following:
- Once you transfer it to the beneficiary, you lose control of an irrevocable trust while you have full control over a revocable trust for life. You can access, use, and manage the assets in a revocable trust as you deem necessary.
- Only under certain conditions can you revoke or change an irrevocable trust, while you can revoke or change a revocable trust any time you want.
- With an irrevocable trust, you may reduce or minimize inheritance taxes, while a revocable trust doesn’t offer any inheritance tax benefits.
- You may be able to protect your assets from lawsuits, creditors, and Medicaid with an irrevocable trust. The reason for this is that once you transfer assets into an irrevocable trust, they will be protected from personal liability because you no longer own them. This protection does not apply to assets in a revocable trust.
- An irrevocable trust is significantly more difficult and expensive to manage and establish than a revocable trust.
You should base your decision to create an irrevocable trust or a revocable trust on your financial goals, financial circumstances, and personal estate planning requirements. With this in mind, it’s crucial to speak with a Harrisburg estate planning lawyer who can ensure that you understand the benefits and drawbacks of both trusts and consider your long-term financial goals when creating your estate planning strategy.
You Can Trust Our Seasoned Harrisburg, PA, Estate Planning Attorneys With Your Case
Having a trust can help safeguard your property and preserve it for your loved ones, provide privacy, minimize inheritance taxes, and avoid probate. Regardless of which type of trust you choose to create, having a strong estate plan will help ensure your property is always protected and your loved ones get what they need when you pass away.
To learn more about estate planning and the right type of trust suited to your specific situation, get in touch with our Harrisburg, PA, estate planning lawyers at Cunningham, Chernicoff & Warshawsky, P.C. You can contact us online or call us at 717-260-3527 to schedule your free initial consultation with one of our Harrisburg, PA, estate planning attorneys.