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Differences between a revocable trust and an irrevocable trust

On Behalf of | Dec 6, 2022 | Trust |

Are you a South Carolina resident concerned about the specifics of estate planning? If so, you might want to consider forming a trust. This is something you’ll want to do during estate planning. Depending on your assets, a revocable trust or an irrevocable trust is possibly beneficial.

Understanding a trust for estate planning purposes

A trust is a legal arrangement often used when planning an estate. The trust transfers your assets to a trustee. There are several types of trusts, but the focus here is on a living trust.

A living trust is either revocable or irrevocable. And with a living trust, you can perform trustee duties or appoint someone else. The trustee is legally bound to do what’s best for the trust’s beneficiaries.

Your beneficiaries will benefit from your trust. You might choose your spouse, children or other entity as a beneficiary. When you create your trust, you specify the distribution and management of your assets. The trustee is responsible for following your directions.

If you perform trustee duties, you should choose a successor trustee for when you pass away. The successor will take over the management of your living trust.

What is a revocable trust?

A revocable trust allows you to change the trust or cancel the trust at any time. This provides more control over the trust. You can change beneficiaries, add or remove assets from the trust or change the terms of the trust. And if you change your mind, you can cancel the trust.

Upon your death, the revocable trust becomes irrevocable. That means no changes are possible.

What is an irrevocable trust?

An irrevocable trust is permanent. You can’t make any changes once the trust is finalized. You can’t add or remove assets from the trust. You also can’t change beneficiaries or change the specifics of the trust.

You can form an irrevocable trust or an irrevocable trust in addition to a last will and testament. If your assets are substantial, you might decide to diversify your estate planning.