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Helping You Navigate Complex Legal Issues

Which type of trust is right for Minnesota residents?

Gregory A. Lang

For those who wish to put their assets into a trust, is it better to put them into a revocable trust or an irrevocable trust? A revocable trust is a trust that can be rewritten and changed as many times as the person the grantor wants. With an irrevocable trust, control of the trust is in the hands of the trustee and cannot be rewritten or the trustee fired without the consent of everyone named in the document.

While a revocable trust gives an individual more control of his or her assets, it does nothing for those seeking tax or creditor protection. Generally, a revocable trust is used by people who want to avoid probate, pass down assets in private or who want more control over where assets go when they are no longer able to control their own affairs.

An irrevocable trust is often used in special circumstances or by those who are trying to avoid creditors or a high estate tax burden. However, the transfer of assets to an irrevocable trust after a person finds him or herself in a financial jam could be deemed a fraudulent transfer.

Putting assets in trusts can be a good way to possibly avoid probate, protect assets from creditors and have a clear direction for assets after a person passes. It is important to note that some states may require probate even if a trust has been created. Therefore, it may be worthwhile to talk to an estate planning attorney prior to making a decision as to whether forming a revocable trust, an irrevocable trust or creating a simple will is best for an individual's assets.

Source: US News & World Report, "How to Choose Between a Revocable and Irrevocable Trust", Joanne Cleaver, June 19, 2014

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