There are many reasons why you might choose to use a trust in order to accomplish your estate planning goals. One of the first decisions you’ll need to make when doing this is whether you’ll go with a revocable or irrevocable trust.
One of the most important differentiators between a revocable and an irrevocable trust has to do with considerations for estate taxes.
Property that you put inside of an irrevocable trust is officially transferred outside of your estate, meaning that it is not calculated as part of your total estate value when it comes to determining whether or not you owe taxes after passing away.
In the event that you place property you own into a revocable trust, this property is still owned by you and therefore subject to estate taxes. In a revocable trust, however, you can change your mind and retrieve the property at any time and place it into another trust. However, as long as you maintain control of this property, it is distinctly classified as yours.
Estate tax savings is one of the biggest reasons that you may consider including an irrevocable trust in your estate planning. However, if you are not anywhere close to state exemption, you may choose to instead work with a revocable trust. Meeting with an experienced Pasadena estate planning attorney can help you determine what’s best for you.
