The two main types of trusts that you may want to include in your estate plan are revocable and irrevocable trusts. These types of trusts are somewhat different, so it’s important to learn more about them before you decide which kind of trust best meets your estate planning needs.

Many people immediately believe that the revocable trust is the right choice. With this kind of trust, you remain in control and can change it at any time. You can retain control, and you can cancel the trust if you ever want to do it. On the other hand, with an irrevocable trust, your trust won’t be able to be modified, canceled or amended without permission from your beneficiaries (if at all).

Looking at the main differences between revocable and irrevocable trusts, you may agree that revocable trust makes more sense. There are benefits to choosing an irrevocable trust, though. With an irrevocable trust, your assets are taken out of your estate. This doesn’t happen with a revocable trust. So, if you need to lower your estate’s value for tax purposes, irrevocable trusts are beneficial. 

With irrevocable trusts, you can also protect your assets. Even if you go bankrupt or have lawsuits filed against you, those assets can’t be touched. Why? They’re assigned to your beneficiary and no longer in your name. You technically don’t own them, so they aren’t at risk. 

If you aren’t sure which trust to choose, learn more first

Neither trust is “better” than the other kind since both have their benefits and downsides. If you aren’t sure which one kind of trust is right for you, then it’s worth sitting down and speaking with your attorney about how using either kind of trust could affect your estate. With the right trust, you can protect your own wishes as well as the assets that you want to pass on to your beneficiaries in the future.