Differences between revocable and irrevocable trusts

As people grow older in Massachusetts, they may gain a stronger understanding of their mortality and begin to focus on ensuring that they assets end up with the people they intend for them to go to. There are different ways that people can do that though. Some choose to just have a will while others may decide to put their assets into a trust. However, if people decide to put their assets into a trust they must decide between a revocable or irrevocable trust.

Both trusts will allow people to move their assets out of their name and avoid probate, but the two types of trusts provide different advantages and disadvantages
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Revocable trusts

Revocable trusts as the name infers can be modified by the grantor of the trust. This can be advantageous because it allows them to put more property in it or take out property during their lifetime. It also allows them to change beneficiaries throughout their lives. The grantor is also usually the trustee, which means they will continue to manage and control their assets. However, because they retain control over the assets, the assets could still be taken by creditors and also are subject to estate taxes. They also cannot be used for Medicare purposes.

Irrevocable trusts

Irrevocable trusts on the other hand cannot be modified and once the assets are in the trust they cannot be removed. They also cannot be modified in any way and a trustee other than the grantor controls the assets. This grants people very little control over the assets while they are living, but due to this lack of control people can avoid having to pay estate taxes. The assets also will not be used for Medicare purposes and can be protected from creditors.

People in Massachusetts have different options available to them when it comes to estate planning. Whether people should use a revocable or irrevocable trust is a decision that needs to be made based on the exact purpose of the trust. Experienced attorneys like Attorney Matthew Albanese understand the uses of the different types of trusts and may be able to guide one through the process.

Which Trust is Right for You in Massachusetts?

Deciding which trust is right for you in Massachusetts depends on your specific goals. Revocable trusts are ideal if you want flexibility, privacy, and to avoid probate while maintaining control over your assets. They are particularly useful for those who want to manage their estate without court involvement if they become incapacitated but do not need asset protection from creditors or Medicaid. On the other hand, irrevocable trusts are better suited for individuals seeking to protect assets from estate taxes, creditors, and Medicaid spend-down requirements, although they require giving up control over the assets placed in the trust.

Massachusetts Probate Laws and Estate Taxes

Massachusetts probate law plays a significant role in this decision. Probate is the court-supervised process of administering a deceased person’s estate, which can take months or longer and involve fees and public disclosure. Avoiding probate through a revocable trust can save time and preserve privacy. Additionally, Massachusetts imposes an estate tax on estates exceeding a certain threshold, and assets in revocable trusts are included in the taxable estate. Properly structured irrevocable trusts can help reduce this tax liability. For Medicaid planning, Massachusetts follows federal rules, including a five-year look-back period on asset transfers. Assets held in revocable trusts are generally counted as available resources for Medicaid eligibility, whereas irrevocable trusts may offer protection if set up correctly.

Why You Should Consult an Experienced Massachusetts Estate Planning Attorney

Because of these complexities, consulting with an experienced Massachusetts estate planning attorney is crucial. A knowledgeable attorney can guide you through the nuances of state laws and help you choose the right trust to protect your assets, minimize taxes, and ensure your wishes are honored. Whether you need flexibility or asset protection, professional guidance can provide peace of mind and a clear path forward.

For skilled legal help backed by extensive experience and a strong reputation, contact Albanese Law LLC. Schedule a consultation today to protect your family’s future and navigate complex legal matters with confidence.