A trust is an estate-planning tool that can help manage your property during life while ensuring a smooth transition of affairs after death. There are many types of trusts, but they can all be broken down into two categories – irrevocable and revocable trusts.
A revocable trust, is a trust in which the person making the trust transfers their title of property into the Trust, serves as the initial Trustee, and has the ability to remove, change, modify, alter, or entirely revoke the trust during their lifetime. Trusts of this sort are useful because the trust owns the property, rather than the person making the trust. As such, when the person dies the property held in trust is not subject to probate. An irrevocable trust, by contrast, is one that cannot be altered, changed, modified, or revoked once it has been created. When a person dies, a revocable trust turns irrevocable.
Regardless of their type, trusts have some common features. A trust is a transfer of legal ownership of property or assets from the property owner, to a person or institution responsible for handling the property, called a trustee. Trusts are important for a variety of reasons. For instance, trusts act as a shield against the claims of creditors and they reduce, or possibly eliminate transfer taxes. There are so many types of trusts available, which is one of the reasons why it’s important to have an experienced financial attorney to help you choose which trust will best suit your situation and goals.