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Paul Sobotta, CLU®, ChFC®, CFP®, RICP®
Financial Planner
CA Insurance Lic. #4169793
Kyle Sobotta, CFP®
Financial Planner
Prudential Advisors
205 Washington Street
Arcadia, WI 54612
Phone: 608-323-7032
Fax: 608-323-7964
Email: paul.sobotta@prudential.com
November/December 2024
Revocable vs Irrevocable Trusts
With this issue, we continue our trust segment with revocable and irrevocable trusts. Each serves a different purpose in estate planning. Your legal and financial professionals can give you more details.
Protecting Family Privacy
Once filed with the probate court, your will becomes a public record. Probate is the legal process for reviewing the assets of a deceased person and determining inheritors. The process can be lengthy (sometimes years) and costly for large estates. Revocable trusts are usually used to remove specified assets, such as real estate, financial assets, life insurance, valuable personal property, mineral rights, and appreciating collections, from your will to avoid probate.With a revocable trust, you, as the grantor, can change the trust by written amendment at any time during your lifetime as your financial and estate needs or desires change. Another feature is that placing your assets in a revocable trust will help protect them should you become incapacitated.
Minimizing Taxes
As the name indicates, an irrevocable trust generally can't be changed once it's established unless a court permits it to be amended, usually only with the consent of the impacted trust beneficiaries. With this trust, you transfer all ownership of assets into the trust and legally give up all ownership rights to the assets and the trust.Uses include removing assets from your estate for estate-tax purposes, preventing beneficiaries from misusing assets, gifting assets to the estate while retaining income from the assets, removing appreciable assets from your estate while providing beneficiaries with a step-up basis in valuing the assets for tax purposes and gifting a principal residence to children under more favorable tax rules.
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