A living trust is one that is put in place while the person or persons planning the trust fund is still alive. There are two types of living trusts and both provide different benefits. Your personal circumstances will be the deciding factor on which trust fund is for you. By careful planning you can save yourself and your heirs a lot of trouble in the future.

Revocable Trust

A revocable trust means it can be changed or revoked by the grantors while they are living. An example of a revocable trust would be where parents set up a trust fund that provides for their minor children should anything happen to them. They could also be the trustees of this type of trust. Once the children are grown then the trust would no longer be needed and it could be dissolved and the money would revert back to the parents.

Another example of a revocable trust would be where a person has a large amount of money he could safely put away each year for retirement. It can be stored in a trust fund designed just for this. Upon retirement the money would be his to use as he sees fit.

Revocable trusts funds help estates avoid going to probate but do not necessarily avoid current or estate taxes.

Irrevocable Trust

An irrevocable trust can also be established while the grantors are living. But this type cannot be changed readily. These trusts have the assets turned completely over to the trustee. Not even the grantor can change the trust fund.

This would be an advantage for those with very large estates. Irrevocable trust funds avoid probate and some estate taxes. This can bring real peace of mind to both the grantor and the beneficiaries. Having to have you heirs deal with your death is hard enough but having to go through the process of probate and losing half of the estate to taxes is something that can be avoided.

If the grantor makes himself trustee of the trust fund tax benefits may be loss in this type of trust.

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