As you get older, you spend more time preparing your finances for retirement, for any care you may need in the future and to pass on to your family. As part of estate planning, many Americans choose to establish a revocable trust for some of their assets because they come with many advantages, including that you maintain ownership of the revocable trust throughout your life. That’s not the case with an irrevocable trust, where another party takes ownership of the assets until your death.
Why ownership of trust assets matters
By maintaining legal ownership of a revocable trust’s assets, you can decide later on if you want:
- to remove assets from the trust
- to add assets to the trust
- to change the trust’s beneficiaries
- to terminate the trust
If you end up needing long-term nursing care, you may need to use some of the assets in your revocable trust to pay for your care. You also may choose to terminate it without any tax or income consequences. You also can manage investing the trust’s assets as the trust allows and you may receive income on your trust’s investments.
What assets to include in a revocable trust
A revocable trust can include many different types of assets, including the following:
- Bank accounts
- Real estate (including from multiple states)
- Life insurance
- Valuable possessions
- Business interests and intellectual property
When a trustmaker becomes incapacitated
Another aspect many revocable trusts address is what happens if you become mentally incapacitated while you own the trust. You can name a successor for a revocable trust and that person will manage the trust’s assets while you are alive.
Because revocable trusts are flexible and give the trustmaker control of the assets for years, they can be a great estate planning tool. They take time and money to establish, but having one often reduces hassle later on. Working with an experienced elder care and estate planning attorney can help you set up an irrevocable trust that will benefit you, and your heirs, in the long run.