Whether or not you need a revocable or irrevocable trust for your California estate plan depends on several different factors. One of the big differences in the two is that a revocable trust can be changed or cancelled while an irrevocable trust cannot be except in a few very rare circumstances.
Revocable trusts
A revocable trust is created while you are still alive. It offers less protection than an irrevocable trust, but it does have some advantages. Assets in any kind of trust do not have to go through probate, so this element of your estate plan remains private. If you become incapacitated, your trustee can manage the assets for you. You can also use a revocable trust to specify how and when assets are distributed to beneficiaries.
Irrevocable trusts
An irrevocable trust takes assets out of your estate. The advantage to this is that it puts them out of reach of creditors. It also means that the assets in irrevocable trusts are not factored into estate tax. They are also not included when qualifying for Medicaid assistance, although the assets generally must be placed in the trust several years earlier or they will still count against you.
An attorney may be able to help you determine whether one or more trusts might be right for your estate plan and whether they need to be revocable or irrevocable. You might want to create a trust to specify that your beneficiaries receive distributions when they reach a certain age. This could also be left to the trustee to decide. Another common use of a trust is for a loved one who has special needs. With a special needs trust, assets are not counted when determining the beneficiary’s eligibility for government benefits, so they are able to continue to qualify.