Many estate planning law firms have the experience to set up the legal documents of an estate. However, our law firm also takes pride in providing practical advice for our clients.
For example, a contract to establish a revocable or irrevocable trust has scarcely more legal impact than a piece of paper unless the trust principal is funded. This is easily accomplished, however. The trustor needs only to retitle specific assets in the name of the trust. A pour-over clause in the trust can also account for property accidentally omitted.
Our law firm offers a broad range of legal services designed to help individuals craft the estate plan that will best serve their goals. At a minimum, we recommend a revocable living trust, a will, an advance medical directive and durable, financial and medical powers of attorney. These documents will minimize or even avoid the need for probate, memorialize an individual’s preferences regarding life support and other life-sustaining medical choices, and name one or more individuals to make financial and medical decisions on the individual’s behalf in the event of incapacity.
In our experience, we have found that many clients prefer to learn more about the different types of trusts before making decisions about their estate. Two broad categories are irrevocable and revocable trusts.
Funding an irrevocable trust can change an individual’s tax situation immediately because he or she loses control over the transferred asset. The total value of assets left in the individual’s estate would be lower. However, the irrevocable trust would be considered a separate tax entity, and any income it generates above a certain threshold might incur tax liabilities.
A revocable trust, in contrast, creates no immediate tax changes because the trustor retains complete control over the assets in the principal of the revocable trust. From a tax perspective, there is no distinction between the trustor and the trust during his or her lifetime. After the trustor’s death, however, the trust becomes irrevocable.
Source: The Washington Post, “How to determine whether a revocable or irrevocable trust is best for you,” Ilyce Glink and Samuel J. Tamkin, Nov. 2, 2016