Estate planning is a personal process and journey with no right path. What works well for one person’s situation may be difficult or impossible for a different person. It also comes with a new litany of estate planning options. Like your tool bag, you may choose one or none of these estate planning options for your household. Trusts are one type of estate planning choice, and revocable and irrevocable trusts are two specialized trust types.
Trusts are legal relationships between different people or entities. People often use them to handle or manage assets. The grantor is the person who creates the trust, the trustee is the manager and the beneficiaries receive the benefits from the trust.
Revocable trusts are often called living trusts because they can generally be changed while the trustor is living. The grantor moves assets into the trust, still maintaining ownership and allows the trustee to manage the assets. If the grantor wants to move assets, change beneficiaries or revoke the trust, it is possible. They usually bypass New York probate proceedings.
Irrevocable trusts are often used for the benefit of skipping over some estate taxes because the assets are transferred from the grantor completely. While they usually offer protection from taxes, they also have drawbacks. Because the grantor is moving an asset out of their control, they lose the ability to modify the trust because it is no longer the trustor’s property. It is possible to change irrevocable trusts but very difficult to do so. These trusts also have the additional benefit of shielding assets from lawsuits.
New York irrevocable and revocable trusts are not the only trust types available. Bypass trusts, charitable trusts and special needs trusts are just a few of the other trust options.