While people often think of trusts as tools of the ultra-wealthy, many families in Westport, MA, can benefit from the benefits they provide. For example, revocable trusts are powerful estate planning tools that simplify probate and keep affairs private while offering grantors greater control over the trust and its assets compared to an irrevocable trust.
Attorney Patricia Bloom-McDonald has over 30 years of experience assisting Clients with complicated estate planning challenges. She is standing by to learn your goals, advise you on the suitability of a revocable trust to meet them, and create a trust that complies with state and federal laws. The Law Offices of Patricia Bloom-McDonald, located in Westport, MA, can also help you modify a trust if your life situation changes.
What Is a Trust?
A trust is a legal arrangement in which a person called a grantor places assets into the trust for the benefit of other parties, called beneficiaries. The trust and its assets are overseen by a third party called the trustee, who must abide by the terms of the trust while managing its assets for the benefit of the beneficiaries.
Estate Planning Benefits of Trusts
Trust can help you meet a variety of estate planning goals because they offer:
- More flexibility – While you should have a Last Will and Testament as part of your Massachusetts estate plan, these are limited legal instruments. A trust gives you greater flexibility over when and to whom you want to distribute assets from your estate, making it easier to meet your estate planning needs.
- Increased privacy – After you die, your estate must be probated. Probate is the legal process of proving a will, settling any claims from your creditors, and distributing any remaining assets to your heirs. It’s a time-consuming, public process. However, assets held in trust can pass directly to named beneficiaries, which means they avoid probate entirely.
- Asset protection – Certain types of trust allow you to protect your estate from creditor claims by transferring assets into them. If you no longer own or manage those assets (which are instead owned by the trust and managed by a third-party trustee), your creditors can’t seize them. Similarly, assets held in such a trust don’t count toward your estate for federal or Massachusetts estate taxes. A lower tax burden for your heirs means they keep more money from your estate, protecting your family’s financial future.
- Control over asset distribution – Many people worry their heirs won’t spend their inheritance wisely. A trust can help you address those concerns by placing conditions on how and when beneficiaries receive assets. For example, the terms of the trust can instruct the trustee to wait until your children turn 21 to distribute any assets from the trust. Alternatively, a spendthrift trust could hold assets in perpetuity on behalf of someone who is not trustworthy with money.
What Is a Revocable Trust?
The distinguishing feature of a revocable trust is that you can easily modify or remove assets from the trust. By contrast, you generally cannot remove assets from or modify an irrevocable trust. Whether a revocable or irrevocable trust is right for you depends on your situation and goals. You can place many valuable assets from your estate into a revocable trust, including:
- Your family home or other property
- Money from bank accounts
- Jewelry
- Artworks and collectibles
- Cars
- Proceeds from life insurance or other insurance policies
Pros and Cons of Revocable Trusts
Revocable trusts offer many advantages compared to other types of trusts, but they also have some drawbacks.
Pros
Some benefits of revocable trusts include:
- They are easier to create and modify – While it’s possible to modify an irrevocable trust, it’s extremely difficult. A revocable trust may be better if you anticipate changes in your family situation or want to keep your options open.
- You keep control of the assets – You can remove assets from a revocable trust, giving you greater control while allowing for potential changes if something changes in your life (a marriage or divorce, the birth of a child, etc.).
- You have greater access to your assets – Since you maintain some control over the assets in a revocable trust, you can access them if your finances change or in an emergency.
Cons
Some potential disadvantages of revocable trusts include:
- They offer less protection from creditors – In general, creditors cannot seize assets in an irrevocable trust, as they do not count as your property. However, that’s not true of revocable trusts. If you anticipate creditor claims during your life, an irrevocable trust may be a better option.
- They do not provide estate tax protection – Because you remain in control of assets placed in a revocable trust, they continue to count toward your estate, meaning they are subject to Massachusetts and federal estate taxes. Only irrevocable trusts provide these valuable tax protections.
- They require more active management on your part – Assets must be properly transferred into a revocable trust and retitled. Otherwise, your heirs could be unable to access those assets after your passing.
- They are more expensive than a will – Revocable trusts cost money to set up and may also need ongoing management, increasing the costs for grantors. People with less complicated estates or fewer financial concerns may find that a will can meet their needs for less money than the expense of creating a trust.
Contact a Westport Revocable Trust Lawyer Now
The Law Offices of Patricia Bloom-McDonald can advise you on the right estate planning tools to meet your long-term needs. Call now or complete our contact form for a consultation with a revocable trust lawyer in Westport, MA, and let’s discuss whether this type of trust is right for you.
Located in Westport, The Law Offices of Patricia Bloom-McDonald proudly serves clients across Massachusetts, including all of Bristol and Norfolk Counties, Plymouth, and the southern coast. Specific areas of service include New Bedford, Fall River, Dartmouth, Acushnet, Taunton, Dighton, Berkley, Swansea, Somerset, Seekonk, Fairhaven, Marion, Raynham, Easton, Mansfield, Attleboro, North Attleborough, Rehoboth, Lakeville, Bridgewater, Rochester, Norton, Assonet, Stoughton, Canton, Sharon, West Bridgewater, Brockton, Whitman, Maynard, Quincy, and Cape Cod. If you cannot come to us, we will come to your home, office, or a convenient location of your choosing. The initial consultation is complimentary.