Estate law in Tracy and Manteca is complex, and only an attorney with experience handling wills and trusts can make sure your finances are protected. Along with a will, a trust is the most important part of an estate plan. In general, a trust is a legal document that you can use to direct how your personal assets will be managed during your life and distributed after your death. Read on to learn more about different kinds of trusts, including revocable trusts, irrevocable trusts, and credit shelter trusts.
Revocable Trusts
In estate planning, a revocable trust is an entity into which you and your lawyer will transfer your assets while you are still alive. Assets that can be transferred include your home, other real estate, automobiles, stocks, bonds, and securities. A revocable trust has at least two phases: a period that covers the time during which you are alive, and a period that covers the time after your death. With this kind of trust, some assets will be distributed while you are still alive, which is why lawyers also refer to it as a living trust. The grantor may change the terms of the trust or take property back at any time.
Irrevocable Trusts
Unlike a revocable trust, an irrevocable trust is a trust with terms and provisions that cannot be changed by the grantor. A lawyer may suggest you opt for an irrevocable trust because it allows you to minimize estate tax, protect your assets from creditors, and provide for family members who are minors or have special needs. To create an irrevocable trust, you will need to name a trustee who holds and distributes property according to the terms of the agreement.
Credit Shelter Trusts
Lawyers also refer to credit shelter trusts as a bypass trust or a family trust. With this kind of arrangement, you write a will bequeathing an amount to the trust up to but not exceeding the estate tax exemption. After that, the rest of your estate is bequeathed to your spouse tax-free.