Revocable vs. Irrevocable Trusts: Which is Right for Your Family?
- Legal Assistant
- 7 hours ago
- 2 min read
Freedom vs. Protection: Revocable or Irrevocable?
Choosing between a Revocable and an Irrevocable Trust is one of the most important decisions you will make in your estate plan. The right choice depends on your primary goal: do you value flexibility or protection?
1. Revocable Living Trust: The "Flexible" Choice
This is the most popular type of trust for NY and NJ residents.
Control: You can change or cancel the trust at any time. You are the boss.
Taxation: For tax purposes, the IRS still sees these assets as yours.
Primary Goal: To avoid probate court. It ensures your house and bank accounts go to your family instantly without a year-long court battle.
2. Irrevocable Trust: The "Shielded" Choice
Once you transfer assets into this trust, you generally cannot change it or take the assets back easily.
Protection: Because you no longer "own" the assets in the eyes of the law, they are generally protected from creditors, lawsuits, and nursing home costs.
Taxation: This is a powerful tool for reducing estate taxes for high-net-worth families.
Primary Goal: Asset Protection and qualifying for long-term care benefits (Medicaid).
Real NY & NJ Scenarios
Scenario 1: The Manhattan Apartment (Revocable) Mr. Lin owned a condo in Manhattan. He wanted his son to inherit it quickly without the stress of NY Surrogate's Court. He chose a Revocable Trust. The Outcome: Mr. Lin maintained full control while alive. When he passed, his son inherited the condo in weeks, avoiding the typical 12+ month probate delay in NYC.
Scenario 2: The New Jersey Retirement Strategy (Irrevocable) The Smiths in New Jersey wanted to protect their family home from potentially ruinous nursing home costs. The Outcome: They placed their home into an Irrevocable Trust. After passing the state-mandated "look-back" period, the home was shielded. When they eventually needed long-term care, the house remained safe for their children, regardless of medical bills.
Which One Fits Your Life?
Choose Revocable if your main concern is making things easy for your heirs while staying in control.
Choose Irrevocable if you are worried about lawsuits, estate taxes, or protecting your home from long-term care expenses.
Final Thoughts
A trust is not a "set it and forget it" document; it must be tailored to the specific laws of New York and New Jersey to be effective.
Deciding between these two paths requires a careful look at your financial landscape and your family’s future needs. Don't leave your legacy to chance. Contact our law firm today for a professional evaluation to determine which "shield" is best for your family’s unique story.