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Pass down your large assets with a trust A trust can be a great way to pass down large assets, such as a house, to loved ones without having to go through probate or other legal hassles. This is because a trust agreement creates a legal document that outlines who will own the property and how it will be managed.

Irrevocable trusts are generally set up to minimize estate taxes, access government benefits, and protect assets. This is in contrast to a revocable trust, which allows the grantor to modify the trust, but loses certain benefits such as creditor protection.

As noted earlier, there are revocable and irrevocable living trusts. The former is commonly preferred for its flexibility. Also, the grantor does not give up ownership rights. On the other hand, grantors of irrevocable trusts do give up all claim to control and ownership ? and as a result, are off the hook for taxes.

While the revocable trust offers more flexibility, the irrevocable trust offers certain advantages such as creditor protection. If you want to manage the trust yourself and feel like you may want to modify your trust in the future, it would make sense to go for a revocable trust.

Some downsides of an irrevocable trust include the following: You will give up much more control over your financial affairs. Additional tax returns may need to be filed for the irrevocable trust, which can add cost and complexity. Irrevocable trusts may be more difficult to create and are nearly impossible to modify.

The single biggest reason to avoid using an irrevocable trust is if you want to maintain full control over the trust property. While exceptions exist, you should assume for estate planning purposes that whatever property you place into an irrevocable trust is no longer yours.