Revocable/Irrevocable Trusts  

Revocable Trust:

  • Has three parts - Grantor, Trustee and Beneficiary.
  • Trust can be changed at any time.
  • Separate tax return can be filed, but rarely done (requires grantor to obtain Tax ID Number).
  • Common for grantor and trustee to be the same person.
  • Grantor retains control of the assets - therefore they are responsible for paying the tax liability associated with the income and realized gains generated from the trust.
  • Avoids probate.
Irrevocable Trust:

  • Cannot be changed after the agreement is signed.
  • Most trusts revert to irrevocable at death of grantor.
  • Typically used for estate tax planning, asset protection, probate avoidance or charitable gift planning.
  • Grantor, trustee and beneficiary are usually always different individuals or organizations.
  • Separate tax identification number is issued.
  • Taxes due from income, gains and losses are paid by the trustee, typically from the trust.
Trust Income

Related Articles
  1. Managing Wealth

    Understanding Revocable Trusts

    A revocable trust is a legal arrangement whereby a grantor transfers property to a trustee who holds the property in trust for the grantor’s benefit.
  2. Managing Wealth

    How To Set Up A Trust Fund If You’re Not Rich

    Contrary to popular opinion, trust funds are not just for the rich. Middle class citizens can set them up, as well.
  3. Managing Wealth

    What's a Trust Fund?

    A trust fund is a fund comprised of a variety of assets, established by a grantor, to provide financial security to an individual, most often a child or grandchild - or organizations, such as ...
  4. Retirement

    Estate Planning for Beginners: Part Three

    A primary purpose of most trusts is to provide a timetable for the distributions of assets where an outright distribution may not be warranted.
  5. Managing Wealth

    Special Trusts For Special Needs

    If you or someone you love has a disability, these trusts can help ease the cost of care.
  6. Managing Wealth

    How to Set Up a Trust Fund in Canada

    You don't have to be rich to make use of a trust fund. Rules can be complex. Here's what you'll need to discuss with your lawyer.
  7. Retirement

    A Revocable Living Trust Makes an Executor’s Job Easier

    Establish a revocable living trust to give you peace of mind and avoid probate. The executor of your will’s job will be easier, too.
  8. Managing Wealth

    Surprising Uses for Trust Funds

    Here are five common situations where a trust fund makes financial sense.
  9. Financial Advisor

    Life Estate vs Irrevocable Trust: Which is Better?

    People considering application for Medicaid can put their biggest asset - their home - in a trust that splits ownership of the property.
Frequently Asked Questions
  1. What Was the First Company to Issue Stock?

    The Dutch East India Co. held an IPO in 1602, making it the first company to issue stock.
  2. When Does a Corporation Decide to Refinance Debt?

    Favorable market conditions or the strengthening of a credit rating may lead to refinancing.
  3. What Is an Odd-Lot Buyback?

    Odd-lot buybacks involve lots of less than 100 shares. Learn how companies get these shares back.
  4. Can I buy a house directly from Fannie Mae (FNMA)?

    Yes, Fannie Mae does sell properties it's foreclosed on; each property is sold in "as is" condition.
Trading Center