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Charleston Estate Planning & Asset Protection Blog

Monday, July 9, 2018

Irrevocable vs. Revocable Trusts - Which Type is Right for Me?

There are several different types of trusts you can choose to use as part of your estate plan and retirement plan. The benefits of a trust are numerous, including protecting assets, avoiding property, providing for incapacity, and protecting property from creditors. Before you choose the type of trust to use as part of your plan, you should consult with a South Carolina Irrevocable vs. Revocable Trusts lawyer to discuss the pros and cons of each trust agreement. Our goal is to help you choose the trust agreement that provides the most protection while accomplishing your goals.

What is a Revocable Trust Agreement?

Also known as a living trust, a revocable trust has several benefits for the creator and the beneficiaries. A creator can modify the terms and conditions of a revocable trust if the trust is not working to benefit the parties. You can alter the terms of the trust, change the beneficiaries, or remove assets from the trust. You can also cancel the trust and transfer the assets to yourself.

Therefore, a revocable trust offers a great deal of flexibility while providing some protection from creditors for assets during the lifetime of the creator. However, a revocable trust typically becomes an irrevocable trust upon the incapacitation or death of the creator.

Revocable trusts can be used for a variety of reasons. For example, if you want to maintain control over your assets during your lifetime but make those assets inaccessible upon your death or incapacitation, a revocable trust is probably a better choice than an irrevocable trust. However, if you are seeking a greater level of protection of assets, you probably need to use an irrevocable trust.

What is an Irrevocable Trust Agreement?

Many people are hesitant to use an irrevocable trust because once the assets are transferred to the trust, the trust agreement cannot be modified, and the assets are controlled by the terms and conditions of the trust agreement. While you may not be able to modify the terms of the trust, an irrevocable trust provides a higher level of protection from creditors’ claims compared to a revocable trust. Furthermore, an irrevocable trust can avoid probate and significantly reduce transfer and estate taxes.

If making changes to the terms of a trust agreement is a major concern, you may have the ability to change the terms of an irrevocable trust in a few circumstances. The trust agreement must contain very specific legal language for the irrevocable trust to be subject to modification. However, if the terms of the trust allow you to obtain the trust assets, your creditors may be able to file a lien against those assets because the trust is not a true irrevocable trust. Therefore, to obtain all the benefits of choosing an irrevocable trust, you need to consult a South Carolina trust lawyer to ensure the agreement is structured correctly.

Understanding South Carolina Irrevocable vs. Revocable Trusts Requires Expert Assistance

This has been only a brief comparison about the attributes of a revocable trust and an irrevocable trust.Within each category, there are many different uses for each type of trust agreement. A trusts lawyer reviews your entire financial situation, discusses your goals and needs, and address your concerns about asset protection, probate, and taxes. Schedule an appointment with one of our attorneys. After analyzing your situation, your attorney can discuss your options with you to determine whether a revocable trust or irrevocable trust is best for you and your family.

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Wiles Law Firm, LLC helps clients with their estate planning needs in Charleston, South Carolina and the surrounding areas such as West Ashley, Summerville, North Charleston, Mount Pleasant, and John's Island.

Information on this website is not legal advice. Further, viewing of the enclosed information does not create an attorney-client relationship with Wiles Law Firm, LLC. Matters will be handled by attorneys who primarily practice out of our office in Charleston County located at 852 Lowcountry Blvd., Ste. 101, Mt. Pleasant, SC 29464. M. Emerson Wiles, III is the attorney responsible for this advertisement.

Any result Wiles Law Firm, LLC may achieve on behalf of one client in one particular matter does not necessarily indicate similar results can be obtained for other clients. Please contact a South Carolina estate planning attorney or one of our attorneys with Wiles Law Firm, LLC for a consultation regarding your unique estate plan.

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