The basic structure of an estate trust, its principles, and the differences between a revocable and irrevocable trusts.
An Estate Trust is a three-party fiduciary relationship in which the first party, the Grantor, transfers a property to a legal entity called Trust, which is managed by the second party, the Trustee, for the benefit of the third party, the Beneficiary. There are two kinds of trusts: Revocable and Irrevocable.
A Revocable Trust is one whose provisions or terms can be changed anytime. The trust is still part of the estate and, hence, not protected from creditors. The given example includes a family Living Trust, which is explained in our blog “Family Living Trust.”
An Irrevocable Trust is one whose provisions or terms cannot be changed after they are setup and operational. The trust is not part of the estate and thus protected from creditors. Examples include ILIT and CRT, which are respectively explained in our blogs “Irrevocable Life Insurance Trust (ILIT)” and “Charitable Remainder Trust (CRT).”
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