What Is a Reversible Living Trust?
A reversible living trust, more commonly referred to as an irrevocable living trust, is a trust that can be unilaterally terminated or dissolved by the person who creates the trust.
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Living Trusts
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A living trust is a legal method for owning property. The person who creates the trust is called the trustor, and she transfers property to a trustee who manages the property for the benefit of one or more trust beneficiaries.
Reversible
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When a living trust is reversible, this means the trustor can revoke the trust at any time. In essence, this means the trustor shuts the trust down and reclaims title and possession of the trust property.
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Irreversible
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An irreversible, or irrevocable, living trust is a trust that can be terminated only if the trustee and the beneficiaries consent to the termination. In other words, the trustor can't terminate without permission.
Courts
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Reversible trusts do not require any court action to dissolve the trust. Irrevocable trusts, on the other hand, can be terminated by court order if the trustee and beneficiary don't consent to its termination.
Warning
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The biggest reason for making a trust irreversible is that doing so can save money on taxes. An irreversible trust does not provide income tax benefits for the trustor.
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References
- "Nolo's Make Your Own Living Trust"; Dennis Clifford; 2009
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