The revocable trust is just that, revocable. You may change, amend and cancel the revocable trust during your lifetime. Upon your death, the trust becomes irrevocable. You may also retain benefits from a revocable trust during your lifetime. On the other hand, the irrevocable trust does not allow for the flexibility of change. Once an irrevocable trust is executed, it cannot be changed.
It is important to distinguish a revocable from an irrevocable trust because a revocable trust won’t protect your assets. Your creditors can step into your shoes and revoke your trust if they are awarded a judgement. For example, assets titled to your revocable living trust are vulnerable to your present and future lawsuits. To lawsuit-proof your wealth, you need an irrevocable trust or another protective entity. Revocable trusts are however, great Estate Planning tools.
While it does offer more protection, one serious disadvantage of using an irrevocable trust is that once you establish and fund the trust, you cannot cancel or modify it and reclaim property you transferred to it. You thus lose both ownership and control over the trust assets. Since you cannot revoke or change an irrevocable trust, your creditors have no greater power to unwind your trust and reclaim its assets. But for an irrevocable trust to protect you, it must be presently funded. Until you transfer assets to your trust, they are your assets, and can be claimed by your creditors.
For Asset Protection we seldom use irrevocable trusts because you lose both ownership and control over your assets. There are other combinations of protection which can be created to provide you with security as well as control. To speak with an attorney about trusts or Asset Protection contact us at (561) 953-1050 for your complimentary preliminary consultation. Our experienced attorneys can help you understand the best way to protect your assets.
The Presser Law Firm, P.A.
6199 N. Federal Highway, Boca Raton FL 33487
(561) 953-1050 or e-mail Info@AssetProtectionAttorneys.com