Residents of California nearing the age of retirement may be wondering how they should arrange for their property and assets to be passed on in the event that something happens to them. A revocable trust may be a good way for individuals to provide for the distribution of their assets in the event that they become incapacitated, and the trust may even make it easier for those people to draft their wills.
Although revocable trusts may be changed at any time during a person’s life, these trusts become irrevocable upon death. Irrevocable trusts are always difficult to modify. A person who creates an irrevocable trust will need to obtain the approval of all people involved in the trust in order to make any changes, such as firing a trustee. Irrevocable trusts should only be created by the very sure, according to one source, and may be best used for things such as ensuring the permanent flow of financial aid to an incapacitated dependent.
People should be careful even when setting up revocable trusts, since the establishment of a trust may actually complicate the distribution of certain types of assets such as jointly owned property. Trusts should also not be used for assets that already have direct beneficiaries, which would included employee retirement plans and life insurance policies. For other assets that are not already accounted for, a trust may make the continued management or transfer of these assets easy to effectuate without requiring probate court approval.
Since there are many considerations in deciding whether to establish a trust or what type of trust to establish, individuals may want to consult with an estate planning attorney. The attorney may advise clients as to which items of property should be included in a will as opposed to being placed in a trust.
Source: US News, “How to Choose Between a Revocable and Irrevocable Trust”, Joanne Cleaver, June 19, 2014