Ohio residents who think that estate planning is just for older people or those persons who are very wealthy couldn’t be more wrong. Anyone can benefit from an estate plan and today that may mean more than just a will. Many people are finding that trusts offer a level of flexibility that is very valuable. In fact, Forbes suggests that it is not tax savings but control over ones’s assets that may be the biggest benefit of a trust.
At a high level, there are two categories of trusts. The Balance indicates that these are revocable trusts and irrevocable trusts. As the names imply, among the differences between these two is a person’s ability to change the details of a trust or not. Irrevocable trusts are not to be changed but in some select cases may be if the trustee provides approval. These trusts provide a greater level of tax shelter than their revocable counterparts in exchange for their lesser level of flexibility.
In essence, property put into an irrevocable trust no longer belongs to the individual and is therefore exempt from any estate taxes. These assets would also be out of the reach of creditors in a bankruptcy or other proceeding and would even be excluded from a property division settlement in a divorce.
With a revocable trust, a person may change or update the terms at basically any time via either an amendment or a complete revocation and creation of essentially a new trust. Trusts also keep a person’s wishes private and out of the probate process.