When you set up a trust to pass on your assets, you have some options. The trust can be either a living trust or a testamentary trust, both of which can be revocable or irrevocable. The type of trust you create is up to you, and it's important to discuss your choices with a qualified attorney from a firm like Vandeventer Black LLP.
A Testamentary Trust Begins After You Die
A testamentary trust doesn't go into effect until you die, and it is generally created as part of your last will and testament. As long as you are deemed competent at the signing of your will or estate planning documents, you can change the parameters of a testamentary trust. The trust can be changed because it isn't official while you are still alive.
Once You Die, A Testamentary Trust Is Automatically Irrevocable
The testamentary trust becomes valid the moment you die, and changes or modifications to the trust can no longer be made. Although, to protect your intentions, the trust can be modified. For example, if you allocated funds for a beneficiary to adopt a child, yet the costs have surpassed the amount you determined, the trust can be modified to cover these costs. It has to be clear in your trust that your goal was to pay for the entire adoption of a child for the beneficiary in order for the trust to be changed.
A Living Trust is Set Up as Revocable or Irrevocable
With a living trust, you have to be sure of your beneficiaries if you decide to set up an irrevocable living trust. This is because a living trust that is set up as irrevocable is almost impossible to modify unless you have the permission of both the settlor (you) and the beneficiaries of the trust. A revocable living trust can be changed or modified by the settlor to meet your current needs. As long as you keep your rights to revoke the living trust, you can get rid of the trust at any time for no reason.
The goal of any trust is for the settlor to distribute their wealth to heirs as they want. Modifications may occur, post death, for the wishes of the deceased to be carried out. The state where you live will determine the specific steps that need to be taken to form a trust, to modify it, or to dispel of it completely.
When you want to have control over where your money goes after you die, a testamentary trust or living trust are two options to consider.
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