Everyone’s estate planning needs are unique, with different estate planning needs at different stages of life. The variety of choices and options can often leave you feeling confused and overwhelmed. At Dougherty, Molenda, Solfest, Hills & Bauer P.A., we can help you understand your options and work with you to find the solutions that work best for you and your family. We’ll help you decide if a trust fits your personal situation.
Revocable Trust
A revocable trust allows the grantor (creator) control over the trust assets, as well as the ability to change or terminate the trust at any time. Its use will not reduce federal estate tax. However, provisions can be included in the trust to minimize federal estate tax. The most common reason to establish a revocable trust is to avoid the expense and delay of probate.
Irrevocable Trusts
Irrevocable trusts may be considered when the estate owner’s primary objective is to obtain federal estate tax savings. When property is placed in an irrevocable trust, the grantor is giving the property away permanently. Since the grantor no longer owns the property, it will most likely not become part of the gross estate and will not be subject to estate tax.
Cabin Trusts
Cabin trusts, like other trusts, can be either irrevocable or revocable, depending on how they are set up by the grantor. The nature of the trust determines the level of control the grantor retains over the property and the legal and tax implications.
Irrevocable Cabin Trusts: When a cabin trust is set up as irrevocable, the grantor transfers ownership of the cabin to the trust permanently, relinquishing control over the property. This type of trust is beneficial for reducing estate taxes because the property is no longer considered part of the grantor’s estate upon their death. It also offers protection against creditors and legal judgments since the grantor no longer owns the asset.
Revocable Cabin Trusts: In contrast, if a cabin trust is revocable, the grantor maintains control over the trust and can alter or dissolve it during their lifetime. This flexibility allows the grantor to change the terms of the trust or reclaim the property if their circumstances or intentions change. However, because the grantor retains control over the trust, the property remains part of their estate for tax purposes, and the asset is not protected from creditors.
The choice between making a cabin trust irrevocable or revocable depends on the grantor's specific financial, familial, and legal circumstances, as well as their objectives for the cabin and their estate as a whole.
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To learn more about the services our estate planning lawyers provide, please call us at 952-432-3136 or, if you prefer, contact us using our online form.