Trusts are a remarkable tool for estate planning, allowing you to protect your wealth and ensure your assets are distributed among your family members when you pass away. These trusts allow individuals to manage their assets and plan to distribute their wealth.
In Nevada, two common types of trusts are revocable and irrevocable. Understanding the differences between these two types of trusts is essential for making informed decisions regarding your estate planning.
Consulting an experienced estate planning lawyer in Nevada can help you develop the best plan based on your goals and requirements.
Understanding Revocable Trust
A revocable trust is a flexible estate planning tool that allows the grantor (the person creating the trust) to maintain control over their assets during their lifetime. When using a revocable trust, you can:
- Remove or add beneficiaries when you want
- Remove or transfer assets in the trusts
- Modify the trust terms related to how your assets can be distributed or managed
- Terminate it when you want
It is important to note that when the grantor passes away, the revocable trust becomes irrevocable.
Understanding Irrevocable Trust
Irrevocable trusts are permanent and cannot be altered or revoked once established, except under certain circumstances. You can’t remove or add beneficiaries or even alter the trust terms.
These trusts are classified into different types, including:
- Charitable trust
- Generation-skipping trust
- Grantor-retained annuity trust (GRAT)
- A qualified domestic trust (QDOT)
- Qualified personal residence trust (QPRT)
- Special needs trust
These irrevocable trusts are either a living or a testamentary trust (last will and testament).
Revocable Trust or Irrevocable Trust: Which is the Right Option for You?
Determining whether a revocable or irrevocable trust suits your estate planning needs depends on various factors, including your goals, financial situation, and personal circumstances.
Choosing Revocable Trust
A revocable trust provides flexibility and control during your lifetime. It allows you to modify or revoke the trust at any time and adapt your estate plan as circumstances change. It is best to select this trust if:
- You value privacy and want to transfer your wealth to the beneficiaries without going through the probate process
- You are the owner of real estate in various states and don’t want to go through the ancillary probate process
- You might make changes in the trust during your lifetime
- You want to manage and use your assets without any issues or restrictions after the creation of a trust
- Your wealth has a lower value compared to the federal estate tax exemption
Choosing Irrevocable Trust
An irrevocable trust cannot be altered or revoked once established, except under limited circumstances. Selecting this trust is better if:
- You are ready to give up control of the assets once the trust is created
- The value of your wealth is more than the federal estate tax exemption , and you prefer to avoid taxes
- You want to preserve your wealth from any creditors in the future
Consult an Experienced Estate Planning Lawyer in Nevada
Revocable and irrevocable trusts serve distinct purposes in estate planning. When considering trust options for your estate planning needs, it is vital to seek professional legal advice to tailor your trust arrangements to your specific needs and ensure compliance with Nevada state laws.
At Bourassa Law Group, our estate planning lawyers in Nevada can help you understand the differences between multiple trusts and help you determine which one is best for you. Call us at (800)870-8910 for a free consultation.