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What is the difference between revocable and irrevocable trusts?

Creating a trust can be an important part of the estate planning process. Unlike wills, trusts do not have to go through probate, meaning the estate receives more privacy, and they can be more easily tailored to the needs of the individuals. There are several different types of trusts, but two of the most common are revocable and irrevocable trusts

The main difference between a revocable trust and an irrevocable trust is that one can be changed as needed after it is set up — or canceled completely — and the other cannot. Revocable trusts can be altered or revoked, hence the name, as needed after the trustmaker establishes the trust. Revocable trusts are appropriate for those who want to be able to change who the trustees are later on or who want the freedom to add or remove property from the trust.

Those setting up irrevocable trusts must make very certain they are clear on the terms of the trust and the named trustees because the terms cannot be changed later on. Once the trust is set up, no one can access the trust property. The main benefit to these types of trusts is that the assets in the trust cannot be accessed by creditors while the trustmaker is still alive -- unlike revocable trusts.

Which type of trust is best for your particular circumstances depends on your estate plan as a whole, the type and amount of assets you have and how you wish those assets to be disbursed. There are also other kinds of trusts, such as asset protection trusts, that may be of benefit to some New Jersey residents. It is important to be clear on all of the available options and their pros and cons before making a decision.

Source: FindLaw, "Types of Trusts" accessed Feb. 12, 2015

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