Many Americans start estate planning in order to help their heirs avoid probate. There are multiple reasons why you might want to do so, chief among them that probate can take a very long time and while your assets are in probate your heirs have no access to them.
One of the many tools at your lawyer’s disposal is the revocable trust. According to Experian, a revocable living trust can allow your heirs to avoid probate while giving you maximum flexibility.
How can a living trust help?
A revocable living trust will allow your heirs to avoid probate. Additionally, while you are still living you can change the terms of the trust as often as you like and anything that you put in the trust still remains your personal property. What this means is that even though a revocable living trust will allow your heirs to avoid probate.
What about taxes?
The other major variety of living trust is an irrevocable living trust. With an irrevocable living trust you cannot make any changes to the trust once you put the assets inside of it. Additionally, anything that you put in an irrevocable living trust is no longer your personal property, but rather the property of the trust.
With an irrevocable living trust, your assets are not subject to estate taxes since they are no longer your property. An irrevocable living trust will also Shield your assets from creditors. However, if the court finds that you have created an irrevocable living trust to defraud creditors there may be legal penalties for this.