FINANCE YOUR FUTURE WITH AVANTIA
REVOCABLE LIVING TRUST
The Differences Between a Revocable and Irrevocable Living Trust
As an example of one of these types of family trusts, a revocable living trust is a legal document that draws out how someone's assets will be divided. The important key here is that it is revocable, meaning that the agreements behind this can be changed at almost any time. There are a few benefits to this kind of trust, the first being that it protects the privacy of both the benefactors and the grantor. It also works to minimize the estate taxes that are common in these kinds of trusts. In the writing of this document, there is someone who is given the responsibility of administering all of your assets. This person should be someone who has an unbiased outlook of the situation, along with expertise in how to administer these funds fairly and accurately. That is why having a financial advisor is important for these kinds of documents, in order to ensure that every party present is represented for, with you being the most important.
On the other hand, we have an irrevocable trust. This is a trust that cannot be changed, altered, or amended without the consent of the grantor, along with the agreement of all of the beneficiaries of the trust. This allows the grantor to remove all of their ownership rights over their assets when the trust is signed to the assets and the trust itself, which is now under the ownership of every party involved, including the beneficiaries. This trust offers more benefits than the revocable trust. The main benefit is that of the tax shelter benefits, which allows the beneficiaries to work generally tax free with their new assets. This is a benefit that is not seen with revocable living trusts and is an important consideration to talk about with your financial advisor the next time you discuss your will.