A family trust is established to transfer, manage, and protect assets for members of a particular family. The trust's creator (the grantor) transfers ownership of certain assets to the trust itself; then, upon the grantor's death, the assets transfer to the specified beneficiaries while avoiding the probate process. Family trusts come in two main forms, revocable and irrevocable. Here’s a closer look at their key differences.

Revocable Trusts

In a revocable trust, the terms of the arrangement can be altered at any time by the grantor during their life. The assets in a trust are considered personal assets, so they’re typically subject to taxes and can be targeted by creditors in the event of a lawsuit. But most people choose a revocable trust because it provides a great deal of flexibility, allowing the grantor to change or cancel the trust as they see fit.

It’s especially well-suited to individuals who want to plan for the possibility of future mental incapacity. A revocable trust allows the grantor to appoint a trustee who will manage the assets in the trust if the grantor becomes incapable of handling their own financial affairs. The grantor can designate exactly what they want to happen to the assets in this event and what steps the trustee should follow.

Irrevocable Trusts

The terms of an irrevocable trust cannot be changed, canceled, or in any way altered. Ownership of the assets in an irrevocable family trust are considered the property of the trust, not the personal property of the grantor. This means the assets are protected if the grantor gets sued. They’re also not subject to capital gains or estate taxes. If the grantor needs long-term nursing care at some point in the future, the assets in the trust can’t be sold to pay these expenses.

The attorneys at Arnold & Stafford will help you design a family trust that best protects your family, assets, and goals. Based in Liberty County, GA, they have more than 60 years' combined experience serving Georgia, Florida, California, Hawaii, and Iowa clients. In addition to estate planning, they represent personal injuries and vehicle accidents, family law cases, criminal defenses, and commercial and residential real estate transactions. Schedule a consultation by calling (912) 369-4529 or learn more about trusts and probate on their website.