How do Illinois residents who are looking to build an estate plan structure their asset distribution? Many people who are looking to complete their estate planning process feel ready to move forward, but they may not feel comfortable with information about trusts and other mechanisms that can help them preserve their estate. It does not have to be that way! Today, we explain the different types of trusts to help you with property distribution.
What is the difference between a revocable and an irrevocable trust? Two general types of trusts exist - a revocable trust, which can be modified during the estate owner's lifetime, and an irrevocable trust, in which the estate owner hands over all control to a trustee. These two types serve different purposes, but they may have a place in your estate plan.
What are the advantages of a revocable trust? First, remember that this type of trust is generally not used to save on taxes. Revocable trusts are generally best for making sure your holdings are "in order" when the time comes for someone else to take over your affairs. The revocable trust can be used to manage your assets if you become incapacitated, as well. When a trust property owner dies, the revocable trust becomes an irrevocable trust.
What about irrevocable trust options? These trusts are not able to be modified after they are established. They are mostly used for tax benefits and are comparatively more complicated in many cases than revocable trusts. Of course, estate planning requires input from qualified professionals who can help you figure out exactly how to best distribute your assets.
Source: U.S. News & World Report, "How to Choose Between a Revocable and Irrevocable Trust," Joanne Cleaver, accessed March 24, 2017