Trusts have many different benefits for individuals going through the estate planning process in Ohio, and one of the most common differences between types of trusts is the ability to alter the trust now and in the future. This is the main difference between an irrevocable and a revocable trust.
Each has advantages and disadvantages. To make things simple, it’s much easier to consider how an irrevocable trust works first. Once you put assets or property inside this vehicle, you cannot take it out. Since you are officially transferring ownership of that property from yourself to the trust, it’s no longer in your control. Irrevocable trusts are primarily used for some kind of asset protection such as against the cost of a nursing home stay or as a way to minimize estate taxes.
A revocable trust means the opposite. You can remove property in the future and terminate the trust entirely if you wanted to. Although ability to alter things is the primary difference between these two trust types, there are also distinctions with regard to estate taxes. A revocable trust provides no asset protection.
Once property is put into an irrevocable trust, it’s removed from your estate because it is now owned by the trust. Assets placed inside a revocable trust, however, can still be considered part of your estate. If you make changes to the trust, and pull that property out of the trust for your own personal use, it could also be considered part of your estate as well.
Putting property into a trust can allow an additional layer of privacy and can help to avoid probate. Determining the best type of trust for you involves speaking with a knowledgeable estate planning attorney about your options first.
Do you have questions about setting up a revocable or an irrevocable trust? Our Ohio estate planning attorneys are here to help you accomplish all your estate planning goals, including trust setup. Reach out to our office today for more information.