What is the Difference Between a Revocable and an Irrevocable Trust?

For many Gwinnett County residents, estate plans will include establishing one or more trusts. Georgia law recognizes various types of trusts, which are legal arrangements through which you transfer assets to an account that becomes a separate entity managed by a trustee. With many types of trusts, the person who creates the trust can also name themselves as the trustee so that they can manage the trust themselves. However, there are different requirements depending on the type of trust, so it is always important to seek legal advice. Georgia residents establish trusts for various reasons, which can range from protecting their own assets in the event they need long-term care in a nursing home to ensuring that a loved one has access to assets without the complications of probate.

All types of trusts will either be created as “revocable” or “irrevocable” trusts. Some types of trusts must be established as irrevocable trusts in order to be valid under Georgia law. Our Gwinnett County estate planning lawyers can explain in more detail.

Revocable Versus Irrevocable Trusts 

What is the difference between a revocable and an irrevocable trust? In short, the terms of a revocable trust can be altered during the settlor’s lifetime (the “settlor” is the person who creates the trust, and is also known as the “trustor” or “grantor”). A revocable trust can also be terminated if the settlor decides they no longer want the trust to exist. Differently, once an irrevocable trust is created, the terms are set and cannot be altered. Likewise, an irrevocable trust cannot be terminated. Once the settlor or grantor of a revocable trust dies, the terms that they set forth for the trust will remain — it cannot be altered or terminated by one of the beneficiaries, for example.

All trusts in Georgia will fall into one of the two categories of revocable or irrevocable. Both types of trusts allow beneficiaries to avoid probate. In other words, the assets held in a trust do not have to be probated, so if your primary reason for creating a trust is to avoid probate, the distinction between a revocable and irrevocable trust will not be as important.

Can I Choose Between a Revocable or an Irrevocable Trust? 

Whether or not you can choose to create a revocable or irrevocable trust will depend on the specific type of trust. There are some types of trusts that can only exist if they are irrevocable.

Medicaid asset protection trusts, for example, must be created as irrevocable trusts. First-party special needs trusts (SNTs) funded with a disabled person’s own assets also must be irrevocable, although a third-party SNT can be revocable. For Georgia residents who want to create a trust in order to minimize estate taxes, there also may be benefits to establishing an irrevocable trust rather than a revocable trust.

Contact a Norcross Estate Planning Attorney 

Do you have questions about creating a trust as part of your estate plan, or about Georgia estate planning in general? An experienced Norcross estate planning lawyer at Bowman Law Firm can speak with you today about your situation, and we can begin working with you on your estate plan. Contact us for more information.

Source:

law.justia.com/codes/georgia/title-53/chapter-12/