When you create a trust during your lifetime, it will be in one of two categories:
* Irrevocable trusts. This is a permanent arrangement so assets transferred into the trust generally are out of your reach. Trust assets also may be beyond the reach of creditors and estate tax collection. Typically, irrevocable trusts are designed to protect loved ones, who are the trust beneficiaries.
* Revocable trusts. With these trusts, you can retain control over trust assets and collect investment income from those assets. If you change your mind, you can reclaim the trust assets so they’re held in your own name again.
Revocable trusts provide protection against possible incompetency. A successor trustee or co-trustee can take over the management of trust assets, if you can’t manage your finances. Also, revocable trust assets can pass to designated recipients without going through probate.
In order to obtain these advantages, you will incur costs to create and maintain a revocable trust. Moreover, you will have to take the time and effort to retitle assets so that they’re legally held by the trust.
