Can A Revocable Trust Be Terminated?
The trustors who created the trust can revoke the trust. This is one of the great beauties of a revocable trust because the trustors could change their mind, their lifestyle could change, their health could change, their plans could change, or the family composition could change. That could make it important to be able to revoke the trust and start anew. Such complete flexibility does bring with it a lack of asset protection. In order to have asset protection, one must use an asset protection trust that has at least a bit less flexibility with it.
Does A Revocable Trust Change To An Irrevocable Trust Upon Death?
Usually, a revocable trust becomes irrevocable upon the death of the grantors. This is not always the case, however. In some cases, the trustor will grant to someone the right to revoke the trust or to control certain dispositions of assets, even after the trustors have passed away.
Do Revocable Trusts Have To File Tax Returns?
Generally speaking, revocable trusts do not file separate tax returns during the lifetime of the grantor. The income that comes into the revocable trust will be reported on the grantors’ tax return. If, however, the trust continues in force after the death of the trustor(s) and has sufficient income, the trustee of the trust would have to file a tax return for the trust.
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