The Difference Between Revocable and Irrevocable Trusts
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When you’re setting up your estate, your attorney should educate you about the various estate planning options that may benefit you, including a possible trust. There are LOTS of types of trust and there are many financial benefits as well as protection aspects that come from setting one or more into place. One consideration, when setting up a trust, is whether to make the trust revocable or irrevocable. “But what is the difference?” you may be asking. In a nutshell:
- Revocable Trust is where you retain control over the trust so changes can be made in future, plus you have the ability to cancel it all together at anytime. However, once you die, the trust becomes irrevocable. The assets in the trust become part of your estate and therefore, subject to estate taxes although, currently, the first 11.2 million dollars of your estate is exempt from estate tax. One of the biggest benefits of the revocable trust is that it makes it simple and easy for your family to access and distribute your assets when you are gone, as it avoids the court probate process that a Last Will and Testament goes through. During your life, the assets in a revocable trust are reachable by creditors and judgements.
- The second biggest benefit is that revocable trusts are living trust, which means if you become incapacitated, the successor trustee can easily manage everything for your benefit. But until that time, you maintain control of your assets. When your assets are already organized in a revocable trust, the next trustee that is named just steps in when the time is right. This is a great way to choose who is managing your finances in the event of your mental decline rather than waiting on your family to petition the court to appoint a conservator, or forcing them to run around with a power of attorney in hopes that the financial institution will honor it.
- Irrevocable Trust is when you opt for a trust that forces you to lose some control or even total control while gaining some type of benefits. The biggest thing is that you are no longer considered the owner in control of the assets, which protects those assets from expenses incurred during illness, like the nursing home. Upon your death, assets in an irrevocable trust are transferred based in accordance with your wishes set forth in the trust document, so it also does not go through probate. In some cases, you can move your assets into the trust without incurring capital gains taxes, though depending on the set-up of the trust, gift taxes may be a concern instead.
Benefits also occur if your goal is to make a charitable gift because you may be able to take an income tax deduction while you are alive on assets you transfer into an irrevocable trust with a charitable beneficiary. Drawbacks of an irrevocable trust depend on your personal situation, but if in the end you need access to the assets in the trust, you may find it difficult to reach the assets, especially for anything other than potential income.
Choosing the right plan for your assets and goals is a very specialized process where an estate planning attorney looks at the big picture with you and your assets, your long term business and retirement plans, and the goals you have for your estate and family. The lawyer then educates you on all the options so you know the right combination of documents that may include trusts in order for you to accomplish those goals.
The experienced attorneys at Thomas Walters, PLLC will spend time with you customizing and crafting your perfect plan, which leaves the legacy you desire in the simplest and most cost effective way. They can help you determine whether you should consider putting your assets into a trust and whether a revocable or irrevocable trust is best for you.
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Celebrating Life with Shayla
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Managing Partner Stacey Walters was blessed with a beautiful angel for 10 years. Her daughter Shayla, who was born with a heart defect, unexpectedly suffered a cardiac arrest at 5 months old, leaving her severely disabled. In April 2018, Shayla unexpectedly gained her angel wings and left Stacey and her family on this earth. While Shayla forever changed their family’s life, she taught Stacey the meaning of selfless love and that we are never promised tomorrow.
Shayla’s story forms the pillar of our law practice: We are all going to leave this earth, but if we aren't prepared for the unexpected, the people we hurt the most are the ones we love the most! It is too important to have a plan in place, and everyone needs an estate plan for that unexpected time, but not just any plan- the perfect plan that easily ensures your final wishes are met while relieving the stress and burden on your family when you are gone!
At Thomas Walters Probate and Estate Planning Attorneys, we build lifetime relationships with our family of clients. We not only help ensure our clients have a current and perfect plan in place, but we give them peace of mind knowing both they and their family can always call on us a trusted advisor when the unexpected happens.
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Upcoming Estate Planning Events
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Register today! 800-769-1561
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Durham
Wednesday, July 11
Primal Food & Spirits
202 NC-54 #107
11:30am-1:00pm
Lunch following
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Burlington
Wednesday, July 11
Cutting Board
2699 Ramada Rd.
6:30-8:00pm
Dinner following
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Durham
Thursday, July 12
Bleu Olive
1821 Hillandale Rd.
11:30am-1:00pm
Lunch following
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Durham
Thursday, July 12
Maggiano's
8030 Renaissance Pkwy
6:30–8:00pm
Dinner following
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Raleigh
Monday, July 16
Nantucket Grill
1145 Falls River Ave.
6:30-8:00pm
Dinner following
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Cary
Tuesday, July 17
Egg & I
104 Ledsome Ln., Suite 101 10:30am-12:00pm
Lunch following
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Cary
Tuesday, July 17
Lugano
1060 Darrington Dr.
5:30-7:00pm
Dinner following
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Raleigh
Wednesday, July 18
Coquette Brasserie
4351 The Cir At N Hills St. # 119 11:00am-12:30pm
Lunch following
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Raleigh
Wednesday, July 18
Peak City Grill
126 N. Salem St.
6:30-8:00pm
Dinner following
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Greensboro
Thursday, July 19
Bravo!
3324 W. Friendly Ave.
11:30am-1:00pm
Lunch following
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Pinehurst
Thursday, July 19
Nina's
111 Central Park Ave, #L
6:00-7:30pm
Dinner following
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Pinehurst
Tuesday, July 25
Scott's Table
311 SE Broad St.
6:30-8:00pm
Dinner following
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Durham
Wednesday, July 25
Bocci
5850 Fayetteville Rd.
6:30-8:00pm
Dinner following
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"We had the good fortune of meeting Stacey Walters a few months ago at one of her presentations in Cary. We were so impressed with her ability to answer all of our questions and concerns. She is now in the process of drafting our Will & Trust. Meeting with her a second and third time has made the process a pleasure. Thanks again, Stacey."
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Mr. & Mrs. Dorry
, Cary, NC
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Chapel Hill
1777 Fordham Blvd.
Suite 101
Chapel Hill, NC 27514
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Charlotte- North
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ExecuBusiness Center
10130 Mallard Creek Rd.
Ste. 300
Charlotte, NC 28262
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Charlotte- South
Ballantyne Business Center
13850 Ballantyne Corporate Pl. Suite 500
Charlotte, NC 28277
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Greensboro
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Byron Offices Suites
7-B Corporate Center Dr.
Greensboro, NC 27408
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Raleigh- Main
Access Office Business Center
8801 Fast Park Dr.
Ste. 301
Raleigh, NC 27617
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S. Raleigh Cary
4904 Waters Edge Dr.
Ste. 260
Raleigh, NC 27606
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The Pinehurst/West End
5228 NC-211 D
West End, NC 27376
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