What are revocable trusts?

People who are creating an estate plan have to consider the various mechanisms available to get their assets to their loved ones after their death. Some people may be able to do this through a will, but others opt to use trusts. 

One type of trust that you may come across when you’re looking into your options is the revocable trust. Understanding the benefits and drawbacks of this type of trust may help you to determine if it’s appropriate for your circumstances.

Benefits of a revocable trust

This is a type of trust that enables you to retain control over the assets during your lifetime. You have the freedom to change the trust or dissolve it as you please. 

Your loved ones will have privacy when it’s time to collect their inheritance because the terms of the trust aren’t made public. These trusts don’t have to go through the probate process, which can help them to receive their inheritance faster than what would happen with a will.

Drawbacks of a revocable trust

Because you retain control over the assets in the trust, your creditors can turn to the courts to use the contents of the trust to satisfy judgments or debts. This means that this type of trust doesn’t protect your loved ones’ inheritance if you’re sued. 

The assets in a revocable trust count as part of your estate. This can have an impact on taxes if you have a sizeable estate. 

A trust is only one component of an estate plan, so you must consider how it will interact with everything else. Getting your plan together quickly may give you peace of mind now, and it helps your loved ones follow your wishes when you die.