A revocable living trust establishes a relationship between:
- The creator of the trust
- The trustee who manages the property within the trust and distributes proceeds to beneficiaries
- The beneficiaries who receive the property in the trust when the term of the trust expires
A revocable living trust allows assets within the trust as well as income generated by those assets to be managed and distributed by the trustee. The trust income and property are then distributed in accordance with the terms and conditions of the trust. This type of trust is referred to as a living trust because it is established during the lifetime of the creator. With a revocable trust, the grantor may revoke the trust at any point by moving the assets into his or her name without the consent of any other party.
Conversely, an irrevocable trust is usually a trust that cannot be amended, modified, changed, or revoked. It is normally created to preserve and protect assets from Medicaid, creditors, lawsuits, and certain estate taxes. However, according to the New York Estates, Powers and Trusts Law, an irrevocable trust may be revoked if everyone that has an interest in the trust agrees. However, if any of the named beneficiaries are disabled or minor children, then he or she cannot consent to the trust being revoked and it will, therefore, remain intact. A way to bypass this issue is to decant the trust. This means that the assets will be poured over into a new trust that will contain terms that better suit the needs of an individual’s estate planning goals.
For many people, revoking a trust may not be in his or her best interest, especially if the trust was established for future long-term care needs, such as Medicaid eligibility. However, if you are seeking to revoke a trust, it is important to speak with an experienced lawyer to assist you with this complex process and discuss the pros and cons of revoking an existing trust.
The attorneys at Hobson-Williams, P.C. are skilled in all aspects of Trusts, Estates, and Elder Law and are dedicated to representing clients with diligence and compassion during emotional times. Contact the experienced New York elder law attorneys at Hobson-Williams, P.C. for a consultation by calling them at 866-825-1LAW or visiting them at thobsonwilliamslaw.com.