Minnesota Revocable and Irrevocable Trusts
Not all trusts are the same. That statement goes further than simply in how they’re written.
There are multiple different kinds of trusts regardless of their contents. A trust lawyer can help you understand all the ins and outs of trust law and how each kind of trust is different. However, we’re going to discuss some facts and differences between two specific kinds of trusts, revocable and irrevocable trusts. While you may assume that once you’ve composed a trust, it’s all done and over with, there’s a handful of other details to discuss.
One of those small details is that revocable trusts can be changed at any point in time. Irrevocable trusts are not so flexible. Though, don’t settle on which kind of trust you want to pick from just yet, take a deeper look at these two kinds of trusts. Just because you want to have full control over the trust at any given point doesn’t mean that a revocable trust is the best option for you. It might be better to take advantage of the tax benefits that come from irrevocable trusts. Consider your options wisely.
Switching Gears
The short explanation on revocable and irrevocable trusts is that one can be changed and the other is almost impossible to change. Revocable trusts are best suited for individuals who may want to change their mind down the road while irrevocable trusts are meant to prevent things from changing. Interestingly though, revocable trusts become irrevocable upon the grantor’s passing, solidifying the trust henceforth. This notion should serve as reassurance if you’re concerned about whether or not your trust will remain intact following your passing. It should also serve as a warning should you want to change it prior to your earthly departure.
Perhaps the central point of discussion, therefore, should be whether you need an irrevocable trust immediately. If the answer is no, a revocable trust may suit you just fine. Though, that still doesn’t change the fact that the revocable trust will become irrevocable upon your passing. If you’re concerned about it becoming irrevocable after you’re gone, start to have some serious talks. The safest bet for you would be to compose trust as an irrevocable trust until proven otherwise.
Different Kinds of Ownership in Revocable and Irrevocable Trusts
When you think about revocable trusts and irrevocable trusts, you should also keep in mind that the court may consider the assets as being owned in different ways. Because of how flexible revocable trusts are, the assets covered by that trust are still considered yours. You may not change the trust whatsoever and even treat it as an irrevocable trust. Nonetheless, since you still have say in how the assets are controlled within the trust, the court will treat those assets are your own.
Irrevocable trusts treat the assets as if you’ve already given them to your beneficiaries. That’s another reason why they’re so definite. Once that irrevocable trust is signed and in writing, you legally forfeit those assets to your benefactors. If you’re thinking about getting a revocable trust that will become an irrevocable trust upon your passing, you won’t have any use for your estate anymore. Otherwise, be sure that you’re actually ready to let go of what’s listed in that trust. Treat an irrevocable trust as if signing over parts of your estate to your beneficiaries while you’re still alive.
Change on the Fly
How much gets changed in a revocable trust is completely up to you. There’s no harm in having a revocable trust. It lets you have more freedom with when you change it. It’s a perfect option if you plan on adding several grandkids as beneficiaries down the line. Irrevocable trusts are, more or less, only revocable with a court order. They’re not meant to be changed because when they’re put into writing, it’s assumed that their authors didn’t want them to be changed.
To reiterate something previously mentioned, a revocable trust doesn’t mean that you have to worry about it being revoked later on. All revocable trusts, as long as they weren’t already revoked by a court order, become irrevocable upon their authors passing. This means that even if you want an irrevocable trust, but you want lots of time to edit the trust, consider going with a revocable trust. It won’t be revocable after you’re gone. You might even assume that both revocable trusts and irrevocable trusts are the same thing, save a few differences.
Your Word is Trust
With an irrevocable trust, you can set your trust in stone the moment that it’s signed. That means that there’s no going back once your name crosses the dotted line. If you’re going to write and sign one of these, putting the most thought and care into this document should be the primary thing on your mind. Your decision will be with you for the rest of your life and outlive you. Don’t be fooled into thinking that an irrevocable trust becomes a revocable trust upon your death. They never change unless there’s a serious reason as to why.
However, to lighten the mood, here’s a positive. An irrevocable trust helps with taxes. While they may not remove all estate taxes that are incurred upon the author’s passing, they do protect the estate that’s covered within them. Think of them as estate tax umbrellas. Moreover, your benefactors don’t have to worry about any income which is generated by the assets that are covered in this kind of trust. There’s no tax on that income either.
Picking the Right One Revocable or Irrevocable Trust
Picking which kind of trust is right for you doesn’t need to happen right away. You may even want to consider asking a law firm about having specific kinds of revocable and irrevocable trusts. That’s okay.
At the law firm of Flanders Law Firm LLC, they can go over the various advantages and disadvantages of any given trust. There’s no reason why you need to make your decision immediately. Right now, you can call 612-424-0398 to start asking questions about trust law and find out more about getting a trust set up.
As far as your concerned, treat your future trust as a revocable trust until you set everything in stone. There are even more details about revocable trusts and irrevocable trusts that the law firm can assist you with.
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Question:
A trust states the Trustee shall distribute all the rest and residue of this Trust to Grantors Estate as set forth in Grantors Last Will&Testament. The distribution shall be subject to all of the same terms and conditions as set forth in Grantors Will, No names mentioned. Trust mentions property shall be divided equally to living member of nearest generation. Two Beneficiary’s Trust assets were awarded to 6 person ‘s named in the will, but not the Trust. Trust was Revocable, 3 years later, Amendment filed and Trust was made Irrevocable. Grantor died 6 years later. Is there any MN law that allows this?
Sam Bowman