If you are beginning to plan your estate, one beneficial type of trust to consider setting up is the revocable trust. A revocable trust is one where you can alter or cancel the provisions after you set it up. Unlike the irrevocable trust, this gives you more opportunities if you need to change the terms of the trust.
Throughout the life of the trust, you'll be able to have the income earned distributed to you directly. Once you pass away, however, the money or assets pass on to your beneficiaries.
Is a revocable trust included in estate taxes?
Yes, a revocable trust is included in estate taxes, so it's not always a good way to shield money or assets from taxation. There are benefits to this type of trust, though, including allowing you to control the principal and avoid ancillary probate if real estate outside your home state is included in the trust.
Another major benefit of a revocable trust is that it will hold assets until beneficiaries are of legal age to accept the property. The trust manages the assets instead of requiring the minor to have a guardian look over their inheritance. You may also set up the trust in a way that distributes funds over time, so you don't have to worry about how the beneficiary will use the money or about them spending it all before they understand the implications.
These are a few reasons to consider setting up a revocable trust. Your attorney can discuss other benefits and downsides with you when you are setting up your estate plan.