Trusts are valuable tools in estate planning, but they are often misunderstood. That might be because there are two different types of Trusts: revocable and irrevocable.
What are the benefits of a Revocable Trust?
• It avoids probate and ancillary probate; there is the ongoing management of the Trust even if the Creator/Grantor is unable to manage the Trust.
• The Trustee can be the Grantor, although in certain situations this could be a detriment.
• The Grantor has full control, which also might be a detriment in certain situations.
• A Revocable Trust provides privacy.
• Will contests may be avoided with the use of a Revocable Trust, except in the case of a pour over Will.
• Upon the death of the Grantor, a quick deposition of the assets takes place.
• If the Creator/Grantor becomes disabled it may avoid a Guardianship proceeding.
Note: A Revocable Trust cannot defeat a spouse’s right of election. It will also not protect assets from Medicaid.
What are the benefits of an Irrevocable Trust?
• If drafted correctly, it is an important Medicaid planning tool – so long as the Principal cannot be distributed to the Grantor.
• Irrevocable Trusts protect assets.
• An Irrevocable Trust provides privacy.
• Will contests may be avoided with the use of an Irrevocable Trust, except in the case of a pour over Will.
• Upon the death of the Grantor, a quick deposition of the assets takes place.
• If the Creator/Grantor becomes disabled it may avoid a Guardianship Proceeding.
The main disadvantage of Irrevocable Trusts is the loss of control that comes with them. The Creator of an Irrevocable Trust gives up the right to amend or revoke the Trust and gives up control of the assets in the Trust. Irrevocable Trusts are also considerably more complicated than Revocable Trusts.
Types of Irrevocable Trusts include Medicaid Trusts, which are important planning tools if drafted correctly; Insurance Trusts; Educational Trusts; and Generation Skipping Trusts.
To learn more about Trusts, contact us.
Vivian Garrastegui, Esq.
SCHNEIDER, GARRASTEGUI & FEDELE PLLC
135 Pinelawn Road
Suite 110 South
Melville, NY 11747
(P) (631) 519-9831