Revocable trusts can be easily changed or modified, but do not offer additional asset protection. They go into effect during your lifetime, after they are created and funded. As soon as you pass away, they automatically become irrevocable — at which point they can no longer be changed.
A revocable trust will typically remain open for approximately 12–18 months after the passing of the Trustor (the trust creator). Once all the estate's debts and taxes are paid, the remaining assets are distributed to beneficiaries.
Irrevocable trusts are primarily used for asset protection. They cannot be subject to claims, liens, or judgments against your estate. The trade-off is that they cannot easily be updated, changed, or modified.
Unlike revocable trusts, irrevocable trusts do not have a set time frame to remain open after your passing — they are intended for long-term planning and asset management.
The distribution of trust assets can be a complicated process. There are three primary ways that trust fund distributions to beneficiaries can work:
Outright Assets are simply given to beneficiaries without restrictions upon the death of the trust creator (once all debts and taxes are paid). This method is straightforward and tends to have lower fees.
Staggered Staggered distributions are triggered by determined events — such as reaching a certain age, a specific date, college graduation, or a wedding. This method is more common when beneficiaries are minors or young adults. A common approach:
Discretionary Discretionary distributions leave the timing and amounts up to the Trustee you appoint. The Trustee has authority to determine when and how much beneficiaries receive. This approach can result in higher administration costs because the trust could take years to deplete. It also provides additional protection from beneficiaries' creditors — sometimes referred to as a "spendthrift" trust.
Intent Statements Many trustees find words like "wish" and "hope" helpful in trust documents. While these are not legally enforceable terms, they give guidance to the trustee as to the intent when drafting — though they do not have to be followed if not appropriate for the situation.
Personal Property Sentimental items tend to carry high emotional attachment for beneficiaries, which can create conflict at the time of distribution. Miracle Law provides a list of specific items, but if that list is incomplete, they will be distributed according to the terms of the trust.
Unique Assets Be specific. Consider whether loans and promissory notes should be forgiven, whether debt should be allocated to a particular beneficiary's share or split equally, and whether someone involved in a business could be named as a special advisor.
Support Trusts Most trusts created for the benefit of children or grandchildren are classified as support trusts. Funds are available to the beneficiary for their health, education, maintenance, and support in the same or similar lifestyle they are accustomed to (assuming funds are available). The Trustee has discretion to consider other income sources and determine appropriate distributions, but needs should be met.
