Blue Ash Revocable and Irrevocable Trust Lawyers

When it comes to estate planning, trusts are an essential tool that allows you to control your assets and how they are distributed. While there is a common misconception that estate planning is only for the extremely wealthy, a trust can give you control over how your assets are used and distributed, regardless of how much money you have. If you are interested in setting up a trust, it is important that you have a general understanding of the different types of trusts, including revocable and irrevocable trusts, and the advantages and disadvantages of each.

Setting up a trust can be a complex process, so it is highly recommended that you contact our team at Wolterman Law Office.

What Is a Revocable Living Trust?

A revocable living trust allows you to determine how your assets are handled during your life and who will inherit your property after you die. A revocable living trust is “living” because it is created while you are still living. You can also change or terminate a revocable trust at any time during your life. Revocable living trusts offer a wide range of benefits, including the following:

Ensure that you are cared for if you become incapacitated. An adequately executed and funded living trust will ensure you are provided for if you cannot care for yourself. This also avoids delays associated with a court-ordered guardianship. It is important that you name an alternate trustee to manage the trust if you are incapacitated.
Avoid the probate process. Probate is a time-consuming and often costly legal process that transfers your property after you die. When you transfer a legal title to a trust, the property is no longer part of your estate, which allows you to avoid probate court and the hassle associated with it.
Maintain privacy. Unlike a will, no public record is required with a trust. As a result, your privacy is protected when you create a trust. However, after you die, if the trust contains property that requires court oversight or if it is not properly administered, certain records might become public.
Greater control. If you leave assets or property to minor children who may not understand how to manage money, a trust gives you control over how and when payments are made. For example, if you are leaving money to a grandchild, you can specify that you would like the money to go toward college tuition or to help with a down payment on a home.
Provide for adult children. If you have an adult child who has a physical or mental disability and is unable to live on their own, a trust will help provide for your child and any ongoing care they may require.
Simple to create and change. Unless you have a vast estate with multiple properties and complex holdings, a living trust has fewer legal formalities than a will and can be created and changed fairly easily with the help of a Blue Ash estate lawyer at Wolterman Law Office.
Tax benefits. You can benefit from creating a trust for tax purposes, particularly if you have substantial wealth. Sometimes, a trust can lower your overall income tax liability and reduce or eliminate federal taxes for more complex living trusts.
Hold property from other states. A living trust will also protect your heirs from having to administer out-of-state probate procedures if you own property in other states. For example, if you own property in Florida but live in Ohio, your Florida property will not need to go through probate if the property is placed in a trust.

When setting up a trust, it is important to understand some of the limitations of a revocable living trust, which include the following:

Tax Implications: A living trust allows you to retain the right to use and enjoy your property, which means that it remains taxable property in the eyes of the tax authorities. Your income from the trust must be reported on your tax return.
Cost: A revocable living trust can be expensive to set up. In addition, you will have to pay annual maintenance fees.
No Creditor Protection: A revocable trust cannot protect your assets from creditors. Since you can terminate a revocable trust, a creditor can force the termination to obtain the assets.

What Is an Irrevocable Trust?

Unlike a revocable trust, an irrevocable trust cannot be changed or terminated once established. You give up control of the trust property but decide how the trust assets will be used and who will serve as the trustee and successor trustee. The following are some of the main features of an irrevocable trust:

Personal Tax Benefits: You can transfer stocks, real estate, and other appreciated assets into a trust. This prevents you from having to pay capital gains taxes. While an irrevocable trust has its own tax ID number and its own tax return, it does not avoid taxes entirely.
Property Ownership: Property placed in an irrevocable trust no longer belongs to you. The fewer probate assets you own, the less time and expense involved in the probate process.
Asset Protection: In most cases, property in a trust is protected from outside creditors, liens, and divorcing spouses. However, there are exceptions, such as in cases of fraud or when assets are transferred to avoid creditors.
Long-Term Care: When assets are moved to an irrevocable trust, you may qualify for Medicaid benefits if you enter a nursing home. However, Medicaid has a “look-back” period, typically five years, so any transfers made within that period could affect eligibility.
Trustees: While a grantor can serve as the trustee of a revocable trust, this is not the case with an irrevocable trust.
Estate Tax Savings: Since you no longer own the property, it is not included in the tax calculations of the total value of your estate at the time of your death. As a result, the value of your taxable estate is reduced.

What Are the Most Common Types of Irrevocable Trusts?

There are several different types of irrevocable living trusts that you can create based on your specific needs and wishes. The following are examples of some of the most common types of irrevocable trusts:

Bypass Trust: Also known as a family trust or an AB trust, this helps families save on estate taxes. It can also provide income to your spouse and family members after you die.
Irrevocable Life Insurance Trust: This distributes life insurance proceeds after you die. Due to its tax savings benefits, it is one of the most frequently used estate planning tools.
Qualified Personal Residence Trust (QPRT): This allows you to transfer your primary or secondary residence to a beneficiary while retaining the right to live in it for a period of time.
Special Needs Trust: The income from a Special Needs Trust can pay for housing, assisted living, education, and other services if you have a beneficiary with special needs without affecting their eligibility for government benefits.
Spendthrift Trust: This type of trust aims to protect beneficiaries from exhausting trust assets too quickly.

How Is a Trust Different from a Will?

Depending on your estate planning goals, you may require either a will, a trust, or both. The following are the key differences between the two:

A trust allows you to avoid probate, whereas a will does not.
A trust reduces the chance of a court dispute over your estate, while a will may increase the likelihood of a court challenge.
A trust avoids the need for a conservatorship, while a will does not.
A trust remains private after death, while a will becomes part of the public record during probate.
A will allows you to name guardians for your children, whereas a trust does not.
A will names an executor, whereas a trust names a trustee.
A will provides instructions for how debts should be paid, whereas a trust may avoid that step entirely by transferring assets before death.

Wolterman Law Office Helps Clients with Revocable and Irrevocable Trusts in Blue Ash

If you are interested in setting up a revocable or irrevocable trust or have any other estate planning needs, do not hesitate to contact our lawyers at Wolterman Law Office. We will discuss your estate planning goals. To schedule a free consultation, call 513-488-1135 or contact us online. Located in Loveland, Ohio, we serve clients in Hamilton County, Fairfield, Norwood, and Forest Park.