Revocable and Irrevocable Trust Lawyer
Having your estate plan fall apart after you’ve passed away is the worst thing that can happen! It keeps your loved ones at odds and may tear them apart. So, will you let this happen or meet with our Maine trust lawyers to learn more?
Here in Jackson Estate Planning, we’ve got the perfect solution for you! We have helped families in the Portland area with their estate planning needs for many years. Our expertise ranges from revocable and irrevocable living trusts, probate administration, wills, estate planning, and business succession planning for individuals and families throughout South Portland.
We are ready to help you with yours as well. Our team of experienced lawyers will first review and discuss your goals; they will design a solution that suits your specific needs while minimizing costs. You don’t have to wait till it’s too late to protect yourself and your family from financial problems. Call us today.
Trust A Brief Overview
A trust is a form of estate planning that can be implemented during your lifetime. A trust can assure that your assets will be cared for after your passing. It is never too early to plan for the transfer of your significant assets to your loved ones with the least amount of difficulty. Creating trust can provide you with peace of mind and spare your loved ones the difficulty of navigating the probate process.
General Information on Trusts
All trusts, whether revocable or irrevocable, have three parties:
- The Creator is the person or entity who sets up the trust document and transfers property or assets to the trust.
- The Trustee, in accordance with the terms of the trust, invests trust funds, uses trust property to meet the needs of the beneficiary, and pays the trust’s administrative expenses.
- The Beneficiary, sits back and enjoys the assets and/or income of the trust.
You can play a role as all three parties, in which case you have a true revocable trust that you can change and revoke at any time. With revocable trusts, you get minimal estate tax savings and limited creditor protection and are ineligible for government program benefits.
What exactly is a revocable trust?
Revocable trusts are also referred to as living trusts, revocable living trusts, and inter Vivos trusts. It is an amendable legal document that establishes a separate legal entity and permits the creator — or grantor — to retitle assets in the name of the trust. The grantor appoints a successor trustee to administer the assets on their behalf and behalf of the named beneficiaries.
Revocable trust benefits
A revocable trust can be an efficient estate planning tool for several reasons.
- A revocable trust is appealing for many because the grantor can change the terms or dissolve the document.
- A revocable trust becomes effective when the legal document is signed and assets are transferred into the trust’s name. In contrast to a will, which only becomes effective upon death, a trust can manage your affairs even if you become incapacitated.
Many people use revocable trusts to avoid probate, which can be a lengthy and expensive process in some states. Bypassing probate also allows the trusts’ details to remain private rather than becoming accessible to the general public.
Revocable trusts’ limitations
Since a revocable trust can be altered at any time, the grantor retains ownership of the trust’s assets. As a result, there are no tax advantages to establishing a revocable trust.
In addition, creditors can still make claims against a revocable trust to recover any debts owed by the grantor.
What does irrevocable trust mean?
A trust that the grantor cannot alter or revoke is irrevocable. Exemptions are only permissible under restricted conditions, and they are tough to obtain; all beneficiaries must agree, or a court order is required. The grantor appoints a third party to serve as trustee and manage the trust.
Once assets are transferred into an irrevocable trust, the grantor relinquishes ownership, and the assets are removed from their taxable estate. Frequently, irrevocable trusts are utilized to facilitate advanced estate tax planning and gifting.
Irrevocable trust benefits
Qualification for Government Programs
Medicaid and Supplemental Security Income recipients with disabilities are subject to strict income and asset limits; they risk losing these government benefits if they own or receive too much money. Income and assets can be shielded by irrevocable trusts to not exceed these limits. These “Medicare trusts” cannot have the Creator as the Trustee.
Like estate tax savings trusts, the Beneficiary has lost substantial control over the trust, so government benefits continue to be provided because the trust funds are not considered the Beneficiary’s personal assets and income.
Minimizes Estate Taxes
People who are willing to make annual gifts of money can use these funds to purchase life insurance in an “irrevocable life insurance trust” that may allow them to avoid estate taxes at death.
Another is a “grantor retained annuity trust,” which provides the Creator with a fixed income stream for a number of years and may exempt a portion of the principal from estate tax. A person may also establish a “charitable remainder unitrust” that pays income to family members now and leaves the remainder of the trust funds to the charity upon death.
In estate tax savings trusts, the Trustee and the Beneficiary may be the same person only in exceptional circumstances, and you must appoint a Co-Trustee who has the authority to override your instructions.
Disadvantages of Revocable and Irrevocable Trusts
The primary distinction between revocable and irrevocable trusts is that the terms and conditions of a revocable trust can be changed at any time, whereas the terms of an irrevocable trust cannot be changed unless all beneficiaries agree.
Revocable Trusts Disadvantages
- There are no tax advantages.
- No security from debt collectors
Irrevocable Trusts Disadvantages
- Give up control of your assets.
- Flexibility is limited.
- At the trustee’s “mercy.”
- Complex legal document that can be hard to understand and follow.
Revocable and Irrevocable Trust: which type of trust is best for you?
Your situation will determine what kind of trust is best for you. Most people use revocable trusts because they are easy to change, and most Americans won’t have to pay estate taxes on their estates. Consider a revocable trust if:
- You want your assets to go to your heirs without going through the probate process.
- You own property in more than one state and don’t want to go through probate in a state other than where you live.
- You presume that your desires for your assets will change throughout your life, and you desire the flexibility to switch beneficiaries.
- After you set up the trust, you want to keep using and managing your own assets without limits.
- Your estate’s value is less than the federal estate tax exemption.
Consider an irrevocable trust if
- You want to avoid estate taxes, but the value of your assets is more than the federal estate tax exemption.
- After setting up the trust, you don’t mind giving up the use or control of your own assets.
- You want to keep your assets safe from debt collectors. Since you don’t have access to the assets in an irrevocable trust, they may be safe from some creditors and lawsuits.
It can be hard to set up a trust. If you want to make one and have questions about how to do it, you might want to talk to a local lawyer for help.
Contact our attorneys to find out which type of trust is best for you.
If you’re looking to set up a trust or already have one, but it isn’t working how you want it to, contact our South Portland, Maine, estate planning attorneys today to start designing a custom trust that fits your unique needs. We’ll guide you each step along the way and advise you about your options for leaving your assets to your beneficiaries in the most effective way.
It is important to learn all of the options as you plan and create your trust to set it up for maximum benefit to you and your family. Contact our experienced South Portland, Maine Trust Attorneys today and set up a consultation to discuss all the options available in creating your Trust.