Which is better a revocable trust or irrevocable trust?

When it comes to protection of assets, an irrevocable trust is far better than a revocable trust. Again, the reason for this is that if the trust is revocable, an individual who created the trust retains complete control over all trust assets. This property is then truly protected by being in the irrevocable trust..

Why would someone set up an irrevocable trust?

Irrevocable trusts are generally set up to minimize estate taxes, access government benefits, and protect assets. This is in contrast to a revocable trust, which allows the grantor to modify the trust, but loses certain benefits such as creditor protection.

What are the major disadvantages of revocable living trusts?

Drawbacks of a Living Trust

• Paperwork. Setting up a living trust isn’t difficult or expensive, but it requires some paperwork.
• Record Keeping. After a revocable living trust is created, little day-to-day record keeping is required.
• Transfer Taxes.
• Difficulty Refinancing Trust Property.
• No Cutoff of Creditors’ Claims.

What assets should not be placed in a revocable trust?

Assets that should not be used to fund your living trust include:

• Qualified retirement accounts – 401ks, IRAs, 403(b)s, qualified annuities.
• Health saving accounts (HSAs)
• Medical saving accounts (MSAs)
• Uniform Transfers to Minors (UTMAs)
• Uniform Gifts to Minors (UGMAs)
• Life insurance.
• Motor vehicles.

Why to choose an irrevocable trust?

You want to protect assets from having to be spent down on long-term care costs. The cost of nursing home care in Massachusetts is about$10,000 per month.

You want to keep life insurance proceeds from being taxable in your estate.

You want to transfer your home or vacation home to your children in a tax favorable manner.

Who needs an irrevocable trust?

You want to minimize your taxes (estate and gift tax,income tax,etc.) because you’re a high net worth individual.

You want to provide for a child or dependent who has a disability and help them qualify for government assistance.

You need asset protection because you work in a profession where you’re liable to be sued.

What are the disadvantages of revocable trust?

The disadvantages of a revocable living trust include the expense of setting up the trust, the difficulty in transferring assets into the trust, and the fact that a will is still needed to supplement it, states About.com.

What are the benefits of an irrevocable trust?

Some of the benefits of an irrevocable trust include the following: Charitable tax deduction — Placing assets into an irrevocable trust transfers ownership over the assets to the trust itself. Asset protection — Contrary to popular belief, a revocable trust does not offer protection against a legal judgment.