When considering whether to put a cabin in a trust, it’s important to understand the two main types of trusts: revocable and irrevocable trusts. A revocable trust allows you to make changes or revoke it at any time, while an irrevocable trust cannot be changed once established. This involves setting up the trust, using a deed, usually a quit claim deed, to transfer the cabin into it, and appointing a trustee to manage it after your lifetime. On the other hand, a revocable trust is often used for estate planning purposes, aiming to bypass probate and allowing you to retain control over the cabin while alive, then passing it to designated heirs after your passing. To explore the process of setting up an irrevocable cabin trust further, additional information and guidance are available.
Video Transcript
Should You Put Your Cabin in One of These?
Should you put a cabin in a trust? There are a couple of different types of trusts: revocable trusts and irrevocable trusts. They have very different purposes when it comes to cabins. What is a revocable trust? A revocable trust is a trust that you set up and you can change it or revoke it at any time.
What is an Irrevocable Trust?
What is an irrevocable trust? It’s a trust that you set up and you give up the right to change or revoke it. You can’t pull it back. It’s set in stone. Now, there are some extraordinary exceptions where the trust can be modified. Those exceptions are with a trust protector provision and with approval of all the beneficiaries. But I’m not gonna get into that level of detail right now.
Let’s talk about how a cabin can use a trust, and let’s first talk about irrevocable trust. So how can you put a cabin into an irrevocable trust? You set up an irrevocable trust. You use a deed, usually a quit claim deed, to transfer the cabin into the trust. And because that trust is irrevocable, it cannot be changed, and usually you are using an irrevocable trust so that the cabin will be preserved for the purposes you designate beyond your lifetime.
You may be the trustee, which means you manage the trust during your lifetime, but then you could set up a successor trustee. That’s somebody who will manage the cabin after you. It might even be a committee of family members. An irrevocable trust is often used to put a cabin or other land into a trust for protection for generations to come. For example, maybe you want your children, grandchildren, and future generations to have access to the cabin and be able to set rules regarding how it’s shared and who maintains it, etc.
We can talk more about how to set something like this up in a future video. Feel free to add a comment below if that’s something you would be interested in, and I can talk you through all the considerations and some of the questions to ponder prior to setting up an irrevocable cabin trust for your family.
What is a Revocable Trust?
Let’s talk about a revocable trust for a cabin. Why would you set up a revocable trust for a cabin? Usually, it is for estate planning purposes because you want to bypass probate.
What is probate? Probate is the legal process and the court hearings related to transferring all of your assets and property to whoever you designate in a will. A will does not bypass probate. A will is the instructions for the court in probate.
If you want to bypass probate, you use a trust and usually a revocable trust because as you age, you may want to make changes to that trust. So, by reserving the power to make changes to the trust, that trust is considered revocable. You can revoke it, you can change it, you can amend it, you can do whatever you want with it, because the whole idea is you want to put your wishes in place for the time of your passing or when you are incapacitated.
So, if you set up a revocable trust for your cabin, that usually means you want to preserve your right and power over it while you have mental capacity and prior to your passing, and then after that time, you want it to pass to your heirs, whoever you designate.
Conclusion
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