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Revocable Trust vs. Living Trust: What’s the Difference?

Image of young lady with question marks. Asking what is difference between a Revocable Trust vs. Living Trust.

Trusts can be an effective way to manage your assets and ensure they are distributed according to your wishes after you pass away. However, there are different types of trusts, including revocable and living trusts. Understanding the differences between a revocable trust vs. living trust can help you make an informed decision about which one is right for you.

Understanding Trusts and Their Benefits.

Trusts are legal arrangements that allow you to transfer assets to a trustee, who manages them on behalf of your beneficiaries. One of the main benefits of trusts is that they can help you avoid probate, which can be a lengthy and expensive process. Additionally, trusts can provide greater control over how your assets are distributed and can offer tax benefits. However, it’s important to understand the differences between a revocable vs. living trust to determine which one is best for your specific needs.

What is a Revocable Trust?

A revocable trust is a trust that can be modified or revoked at any time, giving you flexibility and control over your assets. You can serve as the trustee of your own revocable trust, or you can appoint someone else to manage the trust on your behalf. The assets in the trust are still considered part of your estate for tax purposes, but they can be distributed to your beneficiaries without going through probate.

What is a Living Trust?

A living trust is a trust that you create during your lifetime. It may or may not be revocable.

Key Differences Between Revocable and Living Trusts.

While revocable trusts and living trusts are often used interchangeably, there are some key differences between the two. The main difference is that a revocable trust can be modified or revoked at any time. On the other hand, a living trust is simply one that you set up while you are alive, and it may be revocable or irrevocable. A revocable living trust is often used as a tool for estate planning, and is typically used to manage assets during a person’s lifetime. However, the terms “revocable trust” and “living trust” refer to different aspects of the trust document. It’s important to consult with a legal professional to determine which type of trust is best for your individual needs.

Choosing the Right Trust for Your Needs.

When it comes to estate planning, choosing the right type of trust is crucial. While both revocable and living trusts have their benefits, they serve different purposes. If you want the flexibility to modify or revoke your trust at any time, a revocable trust may be the best option for you. However, if you want to ensure that your assets are managed according to your wishes during your lifetime and after your death, a living trust may be the better choice. Again, a trust can be both. And the most common type of trust is a revocable living trust. Consulting with a legal professional can help you make an informed decision based on your individual needs and goals.

Have a Question? Give Us a Call.

If you have any question about whether a revocable trust vs. living trust is right for you, give us a call at 602-443-4888. We’re here to help.

 

ABOUT THE AUTHOR

Founding attorney Paul Deloughery has been an attorney since 1998, became a Certified Family Wealth Advisor. He is also the founder of Sudden Wealth Protection Law.

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