Creating an estate plan gives you peace of mind because you know you’re taking steps to help your loved ones after you pass away. There are many components that you need to think about when you’re getting the estate plan together. Many people think about the will as a way to pass down assets to your loved ones, but that’s not the only option.
One component to consider is a trust. There are two categories of trusts that you should know about – revocable and irrevocable. A revocable trust is one that you can change when you want. You can’t change the irrevocable trust unless you have permission from the beneficiaries or the court. Once the irrevocable trust is funded, you don’t have any control over the assets.
Creditor protections vary
One of the primary differences between revocable and irrevocable trusts is the level of creditor protection they offer. Your creditors can’t claim those assets because you don’t have control over an irrevocable trust. Since you control them, they can still claim the assets in a revocable trust.
Trusts provide a measure of privacy for the beneficiaries. Trusts don’t have to go through the probate process, so they haven’t entered the public court records. This benefits beneficiaries because people won’t know what they received from the trust unless they tell them.
Your estate plan should include several components so that it provides comprehensive instructions when you’re gone. Discussing your wishes with someone familiar with estate planning may help you determine what you need to set up to relay your wishes.