If you are creating estate plans in Iowa, you may be looking into a trust. There are two types of trusts to consider: irrevocable and revocable. According to US News & World Report, weighing your options between the two is important because both types of trusts offer different benefits and have their own drawbacks.
A revocable trust is something that can be voided or changed at any time. You can rewrite the terms as often as you like, which is nice if your situation changes. One of the biggest reasons for using this type of trust is when you are preparing for a time when you may not be able to handle your own assets. You can set it up and be in charge of it as long as you can, but when the time comes, the trustee can take over management. The biggest drawback is the IRS taxes this type of trust. Once you die, the trust then converts to an irrevocable trust.
An irrevocable trust is basically untouchable once you set it up. The trustee takes immediate control. You can only make changes with the approval of every person involved: the beneficiaries and the trustee. This type of trust does offer tax breaks. It is often used to protect assets, such as in a case where creditors are trying to seize assets, but this can be a criminal act if the trust is set up specifically to shield assets from creditors. It is more for protection for the future. This information is only intended to educate and should not be interpreted as legal advice.