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A few words from the Attorney . . .

My clients often ask me to explain the difference between a “revocable”
trust and an “irrevocable” trust.

A revocable trust is created during our lifetime and may, by its own
terms, be revoked by the person who formed the trust (the “donor”)
while living. This reserved right to revoke is routinely coupled with the
right to amend the trust, but only while the donor is living. Because the
action takes place while we are living, a revocable trust is also
commonly referred to as a “revocable living trust”.

In stark contrast, an irrevocable trust’s terms are permanent and may
not be amended or revoked by the donor. An irrevocable trust may be
created during our lifetime or at death. A revocable trust normally
becomes irrevocable at our death.

There are significant advantages to the implementation of either type of
trust. First, assets held in any trust at the time of death will avoid
probate. Second, all trusts allow us to create standards for how our
assets are invested and or disposed of long after our death. Third (and
perhaps least obvious), both revocable and irrevocable trusts can help
you and/or your heirs reap significant estate tax advantages. A
revocable trust can be drafted to take advantage of critical tax elections
not available otherwise. This specialized tax treatment can, in certain
circumstances, save our heirs hundreds of thousands dollars. An
irrevocable trust has an estate tax benefit in that assets transferred to
the trust are no longer part of our estate. The transfer of assets to an
irrevocable trust is tantamount to giving those assets away. Our estate
will only pay taxes on assets we “own" at death.

For all of these reasons, trusts are among the most powerful estate
planning tools we have at our disposal.

Frank B. Yunes, Esq.