A revocable trust is a legal arrangement in which a person known as the grantor places assets into a trust but keeps the power to change, manage, or dissolve it at any time during their lifetime. In most cases, the grantor will serve as the trustee. It is their job to maintain full control over the assets.
The key term is “revocable.” This enables the grantor to add or remove assets freely. When the grantor dies, the trust then becomes irrevocable.
t that point, a successor trustee distributes the grantor’s assets according to their instructions without going through a long and costly probate process.
Revocable trusts offer flexibility but do not provide strong protection from creditors or estate taxes. Our estate planning lawyers in Marietta have served hundreds of families in Georgia and can help you find better solutions. Call to schedule your free Legacy Planning Meeting.
What Is the Downside of a Revocable Trust?
The main downside of a revocable trust is that it offers no asset protection during the grantor’s lifetime. Because the grantor retains full control and can change or cancel the trust at any time, their assets remain part of their personal estate.
That means:
- Limited Asset Protection: Because the grantor retains control and the assets remain part of their estate, they are vulnerable to creditors, lawsuits, and other claims.
- Lack of Estate Tax Benefits: Assets in a revocable trust are still considered owned by the grantor, so the trust does not reduce estate taxes.
- Required Ongoing Management: A trust can only function in its intended form if it is properly funded, regularly updated, and carefully maintained.
- Higher Upfront Costs: Establishing a revocable trust is generally more expensive than creating a simple will due to legal fees and administrative work.
- No Long–Term Care Protection: Assets in a revocable trust are typically counted for Medicaid eligibility and may be subject to the spend-down process, offering little protection against nursing home or long-term care costs.
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What Is an Irrevocable Trust?An irrevocable trust is similar to a revocable trust, except that the grantor transfers assets into a trust and permanently gives up ownership and control over them. Once established, the grantor cannot modify, revoke, or reclaim the trust assets.
A trustee manages the assets according to the terms of the trust for the benefit of designated beneficiaries. Irrevocable trusts are often used for estate planning because they offer significant advantages when compared to revocable trusts. An irrevocable trust can potentially:
- Reduce estate taxes by removing assets from the grantor’s taxable estate, ensuring more wealth passes to heirs.
- Protect assets from creditors or other claims, since the grantor no longer owns the assets.
- Preserve wealth for the next generation by controlling how and when beneficiaries receive assets.
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The Absolute Protection Trust™
Trusts play a role in safeguarding your assets, planning for long-term care, and protecting your legacy. Unfortunately, both revocable and irrevocable trusts come with inherent limitations. We provide our clients with a better solution in the Absolute Protection Trust™.
Standard irrevocable trusts can be so rigid that they no longer fit a family’s evolving circumstances. Revocable trusts are flexible, but they don’t offer strong asset protection and tax advantages.
Our Absolute Protection Trust™ is designed to bridge this gap by combining robust asset protection with the flexibility necessary for real-life situations.
Our Trust Protector™
One of the features that sets our trust apart is our Trust Protector™. This adds an important layer of adaptability, giving you the ability to make changes to the trust as your life, goals, or family dynamics change. Your estate plan can evolve alongside you.
A Dedicated Team
You’ll work with a consistent, dedicated team that includes an experienced attorney and a skilled Funding Manager who ensures your assets are properly transferred. Since proper funding is essential for the trust to function as intended, we walk you through each step.
Ready for Life’s Curveballs
Smart estate planning means you’re prepared for whatever comes next, including an expensive healthcare crisis. Our Absolute Protection Trust™ is designed to help shield your assets while preserving your ability to qualify for important benefits such as Medicaid.
Get Help With Your Estate Planning Needs
A revocable trust is a way to manage your assets with the flexibility to add and remove them as your circumstances change. While it can be helpful for some people, there are often better options, such as the Absolute Protection Trust™.
In addition to a trust, you need an estate plan. Creating a strategy for how your assets will be managed and distributed during your life and after your death provides peace of mind as you age. Our elder law attorneys can help you prepare for the future.
For more than a decade, Nelson Elder Care Law has been there for Georgia families and helped them through the difficult legal challenges that often accompany aging.
Call today to schedule your Legacy Planning Meeting and get help creating a strong estate plan.
