Revocable trusts and living trusts are individual terms that detail the same thing: a trust in which the conditions can be modified at any time. Irrevocable trusts detail a trust that cannot be altered after its creation without the permission of the beneficiaries.<\/p>\n
A trust is an individual legal entity an individual creates up to manage their assets. Trusts are created throughout an individual\u2019s lifetime to guarantee that assets are used in such a way in which the individual creating the trust considers appropriate. After assets are placed inside a trust, a 3rd party, named a trustee, manages them. The trustee establishes how the assets are invested and to who they are allocated to when the owner of the trust passes away, though a trustee is required to manage the trust according to the guidelines detailed when the trust was created.<\/p>\n
It is not uncommon for a wealthy individual to utilize a trust instead of a will for their estate plan and for specifying what will happen to their wealth upon their passing. Trusts are also a way to decrease tax responsibilities and avoid assets going through probate.<\/p>\n
Key Takeaways<\/strong><\/p>\n Revocable, or living, trusts can be altered following their creation.<\/p>\n Irrevocable trusts cannot be altered following their creation, or at least they are very challenging to alter.<\/p>\n An irrevocable trust offers tax reduction benefits that revocable trusts will not.<\/p>\n