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A trust can help you meet many estate planning goals such as avoiding probate or minimizing estate taxes. Tennessee law generally allows you to create both revocable and irrevocable trusts depending on what your needs are. Let’s take a look at the difference between the two.
An overview of revocable trusts
A revocable trust is one that you have control over throughout your lifetime. You have the ability to add or remove assets, change or add a beneficiary or even terminate the trust. In most cases, you can be both the trustee and a beneficiary, which means that you have greater control of money, land or other items that are inside of it.
An overview of an irrevocable trust
If you have an irrevocable trust, it means that the trust has control of the assets titled in its name. This can be ideal if you are looking to reduce the size of your taxable estate or trying to qualify for government programs. A revocable trust becomes an irrevocable trust when you pass on.
How to know which type of trust best meets your needs
Revocable trusts are ideal if you feel as if you may need to make use of a brokerage account or other assets at some point in the future. They can also include language that allows a trustee to ensure that your needs are met in the event that you become incapacitated. Revocable trusts can be more effective for those who want to protect their assets from creditors. This is because the assets don’t technically belong to you once they are placed in the trust.
The use of wills, trusts, and other documents may help ensure that your current and future wishes are respected. An attorney may be able to explain the different types of trusts and other estate plan tools that are available and the potential benefits of using them.