“I’m all set, I have a Trust”

I hear the first sentence from my clients all the time and I often reply with the second. Trusts are a tremendous asset and something that can protect ourselves and our loved ones, but it comes with caveats. What many people do not understand is that there is no one-size-fits-all option. This is because we all have our own unique needs, especially when it comes to estate and long-term care planning. 

While some may not need a trust, others may need one for long-term care planning, tax planning, caring for an individual with special needs, or for protecting a child’s inheritance from creditors or even the child themselves. 

It all depends on your specific needs at certain points in your life. More often than not, the “I’m all set, I have a trust,” reply is followed by a discussion on the differences between revocable and irrevocable trusts. 

What To Know

The one we call Revocable, or as it’s also known as a living trust, is in which terms, gifts, and clauses can be changed at any time. An irrevocable trust is the opposite, in that it refers to one that cannot be modified after it has been created.

Let’s take one step back to describe what one is. It is a separate legal entity. These trusts are set up by a person to hold assets, referred to as a trustmaker, to manage assets. Trusts are up drawn up during the original maker’s lifetime to assure that assets are used in a way in which he or she deems appropriate. These assets are retitled within and managed by a party known as the trustee. The trustee manages those assets within the trust while the trustmaker is alive, incapacitated, and even after their death. Depending upon the language within, the trustee may be able to determine how the assets are invested and to whom they are distributed. When the trustmaker dies, the trustee must manage it in accordance with the guidelines laid out when the trust was formed. 

Revocable Living Trust 

The trustmaker of a revocable living trust may change its terms at any time. They may remove beneficiaries, designate new ones, and modify stipulations as to how assets within it are managed. Of course, these new designations must be completed before the trustmaker passes away. A trustee cannot make these changes. 

Revocable living trusts have many advantages. First, any property that is owned by the trust passes outside the probate court which means that your beneficiaries can receive their inheritance quicker without any probate court involvement. 

For anyone, who has had the duty to serve as an executor or personal representative of one’s estate, you know how cumbersome, costly, and time-consuming the probate process can be. 

Secondly, a revocable trust maintains privacy which can be important to all parties involved. Lastly—and the most common reason for my young clients with families—it preserves assets for minor children until they reach any age you have selected. 

The revocable living trust is what I normally recommend because as an estate-planning attorney, my job is to plan for the what-ifs. For example, what if something happens to Mom and Dad at the same time? Who will care for their children and how will their children’s assets be managed? 

With a trust, parents can continue to dictate how their child’s inheritance will be managed, after their passing, through specific clauses embedded within it. For example, “Joey will receive 50% of his inheritance at age 25 and the other 50% at age 30.” Without a trust, Joey will be able to obtain 100% of his inheritance at age 18. Think back to when you were 18, can you imagine the poor decision making that would have occurred if you just inherited $500,000? 

Given the above reasons and flexibility of revocable living trusts in contrast with the rigidity of an irrevocable trust, it seems all trusts should be revocable. However, there as some key disadvantages to a revocable living trust. 

First, the trustmaker retains control over a revocable trust, which means the assets funded into the trust are not shielded from creditors the way they are considered irrevocable. If the trustmaker is sued, the court may order the trust assets to be liquidated to satisfy any judgment. Another disadvantage is that when the trustmaker dies, the assets held in trust are subject to both state and federal estate taxes.

Irrevocable Trust

The terms of an irrevocable trust, in contrast, are set in stone the minute that it is signed. Except under exceedingly rare circumstances, no changes may be made to an irrevocable one.

The trustmaker, having transferred their assets into the trust, effectively removes all rights of ownership to the assets and—for the most part—any control. The most common reasons for irrevocable trusts are for tax purposes and long-term care planning. 

Irrevocable trusts remove the assets from your taxable estate, meaning they are not subject to an estate tax upon death. The second and most popular reason to establish an irrevocable trust is for long-term care planning. As with a revocable one, you create it during your lifetime. The key here is that you cannot maintain any sort of control of this trust, which means you cannot be the trustee and/or a beneficiary. The goal for this type is to protect assets funded within the trust from creditors, which may include a nursing home. 

For more information on revocable living trusts and irrevocable trusts, please feel free to contact our office at jebacher@ebacherlaw.com and (978) 269-4485 as we are happy to assist you.

Irrevocable Trust

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Paulette Doucette
Paulette Doucette
17:09 19 Nov 22
Jason was not only helpful and thorough in assisting us in putting our Estate Plan together but was extremely sensitive to our overall wishes and desires concerning its implementation.
Shirlz Jenner
Shirlz Jenner
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We highly recommend Jason Ebacher for Estate Planning. He made the process for us quite smooth and explained it to us in layman's terms.
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Stephanie A. Crayton
19:17 29 Sep 22
Due to some recent family losses, I began to think about my own situation and end of life decisions/wishes – something I had been putting off for years. As a single mother of a minor child, I realize how incredibly important it is for me to put some safeguards in place for my son and for myself.I reached out to the Law Office of Jason Ebacher and I could not be any more pleased with his guidance, compassion, and professionalism. I came to him with very little knowledge of what is needed, the process, and best decisions. Thankfully, he took his time, explained things to me in various ways that gave me a chance to arrive at my own decision. Once all the decisions were made, he legally implemented them into my estate plans.I can’t thank him enough for all of the assistance, time, and knowledge he has shared with me. I highly recommend him and will seek his counsel again, should it be necessary! Thank you Jason and team!
betsy malenfant
betsy malenfant
23:58 25 Apr 22
I have had the pleasure of the professionalism and kindness of Jason's help over the past few years. I have referred him to family members who have also felt so comfortable in his presence in regard to his knowledge and his comforting manner. Thank you, Jason!
Leslie Russell
Leslie Russell
00:41 09 Aug 21
I can not thank Jason enough for his help. His work has given me peace of mind during a time where caring for a loved one is not easy. I really appreciate his temperament and legal ease.
Karen Shuman
Karen Shuman
18:26 06 Aug 21
My experience with Attorney Jason R. Ebacher was excellent from the very first phone call. Jason is professional above all else in addition to being friendly, compassionate, helpful and knowledgeable. He provided me with enough information and guidance to enable me to make solid choices with regard to my estate planning. I highly recommend Jason and his team.
Kristen Wilson
Kristen Wilson
15:25 05 Aug 21
Attorney Jason Ebacher is professional, knowledgeable, and kind. He is always readily available to answer any questions. I highly recommend Jason to anyone.
Essential Balance Wellness
Essential Balance Wellness
13:46 05 Aug 21
You dont know what tomorrow will bring. The only way to make sure the people you love are taken care of, is to make a plan....while your healthy and in good sound mind. There TRULY is "peace of mind in proper planning"
Angie Vargas
Angie Vargas
17:53 17 Mar 21
Jason is a trusted volunteer with our non-profit legal aid organization, where he provides quality pro bono estate planning assistance to some of our clients and is always willing to go the extra mile. During the pandemic, he has remain committed to this work and we greatly appreciate him.
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