As you go about establishing your California estate plan, you likely will come face to face with the issue of trusts sooner rather than later. As reported in U.S. News, all trusts are stand-alone legal entities, meaning that they and the assets you put into them are separate and apart from you personally. Trusts come in two basic types: revocable and irrevocable.
As its name implies, when you set up a revocable trust, you can add or remove assets from it and change its provisions any time you wish in the future, as well as the person or entity you designate as trustee. Conversely, when you set up an irrevocable trust, you relinquish all control over both the assets in it and the trustee who manages and distributes those assets. In other words, an irrevocable trust is “set in stone” once you establish it.
Amount of control you desire
Consequently, in order to answer the question of which type of trust is better for you, you first must answer the question of how much control you wish to maintain over the trust’s assets and the way in which the trustee distributes them. Obviously you retain considerably more control with a revocable trust than you do with an irrevocable one. You can even appoint yourself as not only your revocable trust’s beneficiary, but also its trustee, designating a successor trustee to take over in the event you become ill, injured or otherwise incapacitated.
Various trust purposes
Keep in mind that you can establish as many trusts as you wish, including the following:
- A special needs trust to benefit your disabled child or another family member
- A charitable trust to benefit your alma mater, your church or your favorite charity
- A generation-skipping trust to benefit your grandchildren
- A trust to protect your assets from creditors
- A trust for the benefit of your pets
Whichever types of trusts you choose to establish, you will have peace of mind knowing that they ensure that you have provided for the people you love in the ways in which you want to provide for them. In addition, you likewise will have the satisfaction of knowing that you have handled your assets as privately as possible.
While this information is not legal advice, it can help you understand revocable and irrevocable trusts and what to expect.