The terms living trusts and revocable trusts are often used interchangeably, but the terms have distinct characteristics and purposes. Understanding the differences between the two terms can help you make informed decisions in your estate planning.
Living Trust: A living trust is a broad term that encompasses trusts created while the grantor (the person creating the trust) is alive. The term living trust includes both revocable and irrevocable trusts. However, when people refer to a "living trust," they usually mean a revocable living trust.
Revocable Trust: A revocable trust is a type of living trust that allows the grantor to retain control over the trust assets during their lifetime. It can be changed, modified, or revoked at any time. The grantor typically serves as the trustee and beneficiary while alive, managing the assets as they see fit.
Irrevocable Trust: An irrevocable trust is a type of legal arrangement that, once established, generally cannot be altered, amended, or revoked by the person who created it (the grantor or settlor). Once assets are transferred into the trust, they are typically considered the property of the trust itself, no longer under the direct ownership or control of the grantor.
Flexibility: A revocable trust offers flexibility, enabling the grantor to make changes or dissolve the trust. In contrast, an irrevocable trust, which is another type of living trust, is generally regarded as unchangeable once established.Re
Probate Avoidance: All living and revocable trusts help bypass probate, saving time and money.
Privacy: All living and revocable trusts provide privacy because they avoid probate.
In summary, while both living trusts and revocable trusts serve as effective tools for estate planning and asset management, the critical distinction lies in the ability to modify or revoke the trust. A revocable trust allows the grantor to maintain control and make changes, making it a popular choice for those who want flexibility in their estate planning. Living trusts that generally cannot be altered, amended, or revoked by the person who created it is called an irrevocable trust.
Draft Your Revocable Living Trust with NCLegalDocuments.com
The exact parameters of your trust will depend on your circumstances and provide you with a greater amount of control regarding the distribution of assets. To start your trust, Click to select your trust, or by calling 704-492-2588.
At NC Legal Docs, we offer document drafting, review, court coaching, subscription legal services, and more. Our transparent pricing structure makes it easy to budget for your future business or personal legal needs. Register online, or call (704) 492-2588 to get started.