What are the differences between irrevocable and revocable trusts?
When we talk about trusts there are two main types: revocable trust and irrevocable trust. A revocable trust means that you can set it up and then you can decide at a later date that you want to completely dissolve it. An irrevocable trust means that you can’t actually dissolve it. It’s going to exist in perpetuity, even if there isn’t anything in it.
Please note that there are many other types of trusts within those two categories.
When we’re talking about revocable trusts, we’re generally talking about living trusts. That’s the most popular form of a revocable trust. That’s because it is so easy to set up and administer. If you’re the person setting it up, you can set it up, you can be the settlor, you can be the beneficiary, and you can be the trustee.
Another type of living trust is a land trust. It’s very similar to a living trust and people use it for exactly what it says. To put a piece of property in, right? Sometimes people literally are setting up the trust just because they want to put a piece of land or a piece of property in the trust. There is also something called a pet trust that will be talked about in a later post.
When we’re talking about irrevocable trusts, we’re talking about things like a dynasty trust where you set it up so that it’s not just going to your kids, it’s going to your kids’ kids and so on. In this case, you’re trying to control it for many generations to come.
Another type of your irrevocable trust is a Nevada asset protection trust. Nevada is one of 15 states that allows and offers asset protection trusts. Essentially what it does, if you do it right, is it protects you from liability. So, if someone gets a judgment against you, but everything you have is in this asset protection trust, then theoretically they can’t touch you.
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