Exploring the Pros and Cons of Revocable and Irrevocable Trusts in Ohio

 Posted on January 25, 2023 in Estate Planning

Most people consider the term "estate planning" to be synonymous with creating a will. A last will and testament is a very useful estate planning instrument. It can allow you to dictate how you would like your assets to be distributed after you pass away as well as establish a guardian for minor children if you pass away before they are adults.

However, there are other estate planning tools available, such as trusts, that can be even more beneficial in certain situations. In Ohio, trusts come in two forms: revocable and irrevocable. Both have their advantages and disadvantages; it is important to understand the differences between them before deciding which one is best for your estate.

Revocable Trusts May Be Modified and Give You Continued Control over Trust Assets

A revocable trust allows you to maintain control over the assets contained in the trust while you are still alive. This means that you can decide when, how, and to whom the funds will be distributed and change your mind at any time. Living trusts are typically revocable trusts during the person's life and then become irrevocable upon their death.

Assets held in a revocable trust are still owned by the trust owner or "settlor." This means that the assets are considered part of the settlor's taxable estate. The assets are not shielded from creditors or lawsuits. If a settlor is sued, the assets in the trust may be subject to seizure.

Irrevocable Trusts Do Not Give You As Much Control, But Come With Other Benefits

An irrevocable trust is a more permanent arrangement and typically cannot be changed or modified. This type of trust can be beneficial because it allows you to transfer assets out of your taxable estate while still retaining a certain amount of control. It can also help shield the trust assets from creditors or lawsuits. Because the assets are not held by the settlor, they are not subject to seizure.

Special needs trusts are a special type of irrevocable trust that can be utilized to provide financial resources for disabled individuals without disqualifying them from government benefits. The disabled person gains access to the funds without actually owning the funds. This means that the money will not disqualify him or her from income-based government assistance.

When it comes to estate planning in Ohio, revocable and irrevocable trusts are both useful instruments. It is important to understand the differences between the two before deciding which one is best for your estate. A qualified Ohio attorney can help you determine which type of trust is right for your particular needs.

Contact our Medina Estate Planning Lawyers

Revocable trusts and irrevocable trusts each have certain benefits and drawbacks. If you are interested in setting up a trust, contact the Medina County trust attorneys at the The Law Office of Whitney K.S. Miller, LLC for help. We can sit down with you and learn about your specific needs and then help you develop an estate plan that meets those needs.

You can reach a member of our team at 330-725-4114. We offer free consultations in most cases.

Source:

https://www.investopedia.com/ask/answers/071615/what-difference-between-revocable-trust-and-living-trust.asp