Creating a trust is often a smart move. You can use this legal and financial resource to shield assets, avoid probate when passing them on and otherwise control the ways in which they’re used, depending on the kind of trust you opt to set up.
Whether you can move assets out of a trust you’ve created depends on the type of trust in question and its specific terms. Most of the time, the outcome of such a concern will turn on whether the trust you’ve created is revocable or irrevocable in nature.
Revocable trusts
A revocable trust, also known as a living trust, is a flexible estate planning tool that allows its creator, also known as a grantor, to retain control over the trust’s assets. Because of this control, you can move assets in and out of a revocable trust at any time during your lifetime. This flexibility makes revocable trusts popular for those who want to maintain control over their assets while also planning for the future.
Since this type of trust is revocable, you can also amend the terms of a revocable trust or revoke it entirely if your circumstances or intentions change. This means that you have the freedom to move assets out of the trust by simply revoking the trust or amending the terms to exclude certain assets.
Irrevocable trusts
An irrevocable trust, on the other hand, is far more restrictive. In this scenario, a grantor relinquishes control over the assets placed in the trust, in addition to the administration of the trust itself. As such, when you place assets into an irrevocable trust, you effectively give up ownership and control of those assets. The trustee, who is responsible for managing the trust, must adhere to the terms of the trust document, and the grantor usually cannot unilaterally remove assets from the trust as a result.
With that said, there are limited circumstances under which assets might be moved out of an irrevocable trust, but they typically require court approval or consent from all beneficiaries. Modifying or terminating an irrevocable trust can be a complex task and may require legal intervention.
Whether you can move assets out of a trust depends on the type of trust you’ve created. Should you have questions, you can seek personalized legal guidance at any time.