The major advantages of a revocable living trust include flexibility, privacy, avoiding probate and the ability to plan for eventual disability, reports About.com. Irrevocable living trusts protect assets from estate taxes and creditors.Continue Reading
Revocable and irrevocable trusts are set up during the lifetime of the trust's creator, says CNN Money. The creator of a revocable trust can dissolve the trust or change its terms at any time, including the trustees, beneficiaries and assets, according to AARP. Revocable living trusts avoid the time and expense of probate. Additionally, probate proceedings are public court records, but living trusts are private documents. Revocable living trusts also help their creators plan for mental disability by turning over management of the trust to a disability trustee whom the creator of the trust chooses instead of a court-appointed guardian, as reported by About.com.
Because the assets in an irrevocable living trust belong to the trust and not its creator, they are protected from creditors and saved for the beneficiaries of the trust, states About.com. Federal and state governments do not consider irrevocable trusts part of an estate, so the assets pass directly to the beneficiaries without payment of estate taxes. Several types of irrevocable trusts address the specific needs and situations of the creators, according to CNN Money. Credit shelter or bypass trusts pass assets directly to spouses without taxes, generation-skipping trusts save assets for grandchildren or later descendants, and life insurance trusts pass funds from life insurance policies on to beneficiaries without taxes.Learn more about Financial Planning
Personal assets that can go into a revocable living trust include checking and savings accounts, brokerage accounts not for retirement, stocks and bonds, real estate, small business holdings, patents, copyrights, and rights to natural resources, reports About.com. Retirement accounts and medical savings accounts should not go into the trust.Full Answer >
A family trust is a type of living trust known as a revocable living trust, reports About.com. Its advantages include the avoidance of probate, protection from challenges, delineation of assets and designation of authority if the trustee becomes incapacitated. Disadvantages include the expense of setting up the trust and the continuing necessity of a will to disburse noninvestment assets.Full Answer >
One of the easiest ways to avoid probate is to create a revocable living trust, which allows the decedent's living family members to transfer property quickly and efficiently. A married couple is able to use a single trust for separate property and co-owned property.Full Answer >
Ways to create a will that avoids probate include creating a revocable living trust, having pay-on-death accounts, having a joint ownership of property and giving property away while still alive, according to Nolo. It's best to sit down with a reputable lawyer familiar with wills, trusts and the probate process to improve the chances of avoiding probate.Full Answer >