Is an irrevocable trust better than a revocable trust?
- February 27, 2018
- David Greene
- Comments Off on Is an irrevocable trust better than a revocable trust?
The answer is that one is better for some and the other is better for some. It depends on what you want to accomplish with the trust. Many advantages are common to both, such as: (1) both will avoid probate if handled properly, (2) both will allow the trustor to pass his assets through two or three generations, (3) both will allow assets to be spread out so as to avoid or lessen estate taxes and (4) both are private documents not subject to public scrutiny or court approval. A disadvantage of a revocable trust is that is does not provide asset protection against creditors, such as a judgment creditor, but a unique advantage is that the trustor can revoke the trust at any time if he so desires. The advantage of an irrevocable trust is that it does provide asset protection, so long as the trustor did not know about the creditor at the time the trust was made because the trustor cannot voluntarily revoke the trust. However, the fact that the trustor cannot revoke his trust whenever he chooses is also a disadvantage for many.