Estate Planning Isn’t Just For The Elderly

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6 key differences between revocable and irrevocable trusts in New York

On Behalf of | Jan 14, 2025 | Trusts

Life is full of unexpected twists and turns, and as you navigate through it, you might find yourself thinking about how to best protect your loved ones and the legacy you have built. For many New Yorkers, trusts have become a cornerstone of thoughtful estate planning. These powerful legal tools offer a way to safeguard your assets and provide for your family members, even after you are gone. Among the various types of trusts, revocable and irrevocable trusts stand out as popular choices. But what exactly sets them apart?

Flexibility

Revocable trusts offer more flexibility. As the name suggests, you can modify or even dissolve a revocable trust during your lifetime. Irrevocable trusts, on the other hand, generally cannot be changed once established without the beneficiaries’ consent.

Asset control

A revocable trust keeps you in control. You can add or remove property, change beneficiaries or adjust terms. In an irrevocable trust, you relinquish this control, transferring ownership of the assets to the trust itself.

Tax implications

Irrevocable trusts often provide tax advantages. By removing assets from your estate, they can reduce estate taxes. Revocable trusts do not offer these tax benefits as the assets are still considered part of your estate.

Asset protection

Irrevocable trusts offer stronger asset protection. Since you no longer own the assets, they are generally safe from creditors and legal judgments. Revocable trusts do not provide this level of protection.

Medicaid planning

In New York, irrevocable trusts can be useful for Medicaid planning. They can help protect assets while potentially qualifying you for Medicaid benefits. Revocable trusts do not offer this advantage.

Privacy after death

Both types of trusts offer privacy by avoiding probate. However, revocable trusts become irrevocable upon your death, potentially exposing the details to beneficiaries.

Choose what is right for you

Deciding between revocable and irrevocable trusts depends on your unique circumstances and goals. It requires careful consideration and, often, professional guidance.

Remember, the right choice can provide peace of mind and security for you and your loved ones. If you are considering setting up a trust in New York, it might be helpful to seek advice from an experienced estate planning attorney who can help in making these important decisions.