Trusts Generally

• A trust is a legal document explaining the relationship between you (the trustor, or sometimes called the settler), a trustee (a person you appoint to manage the trust), and one or more beneficiaries (the people you want to receive trust income and/or property). Technically, a trust does not have to be a written document; it can be an oral agreement. However, to be safe and wise, you should always put your trust in writing.
  
  

Revocable Trusts

• A revocable trust is a trust in which you have the power to terminate---i.e., revoke---the trust at any time. In a revocable trust you do not need anybody's permission to terminate the trust. This means that even though you transfer property to the trust (so the property is no longer owned by you personally) you can get that property back at any time by revoking the trust.
  
  

Irrevocable Trusts Compared

• An irrevocable trust, then, is a trust where you don't have authority to unilaterally terminate the trust. Depending on how you set up the trust, you may have to get the permission of the trustee, the beneficiaries and/or a judge to terminate the trust. There are two main reasons for creating an irrevocable trust: (1) it can help save taxes by transferring income-producing property to the lower-tax-bracket trust; and (2) it can keep property safe from your personal creditors.
  
  

When a Revocable Trust is Right For You

• If you don't have income-producing property, or if you are not in a high income tax bracket, then you won't get any tax savings from an irrevocable trust. Similarly, if you don't have any creditors trying to seize or repossess your property, then you are probably safe with a revocable trust. A revocable trust is more flexible and leaves you in total control of the property, so unless you have a good reason for making the trust irrevocable, you should set up a revocable trust.
  
  

Avoiding Probate

• The biggest benefit of a revocable trust is that it helps avoid probate when you die. This can be a huge blessing to your family and loved ones who otherwise would have to deal with the often complex, time-consuming legal process that is probate. Probate is the term for the process by which a judge receives your will, interprets your will and directs your executor to transfer property according to the will. Since a trust owns the property in the trust, you don't own that property so the property does not pass through your will, which means no probate. So anybody who owns at least some property, including real estate, business interests, family jewels and other valuable personal property should probably have a revocable trust.