Quiz: Trusts 3 questions · 80% to pass 1. A revocable living trust avoids probate because:It eliminates estate taxesAssets titled in the trust are not part of your probate estate since the trust (not you personally) owns themThe government cannot see what you ownIt converts all assets to cash at deathProbate only applies to assets titled in your individual name at death. When assets are held by a trust, they transfer according to the trust document without court involvement. This saves time (months to years) and keeps the transfer private.2. The key difference between a revocable and irrevocable trust is:Revocable trusts cost more to createThe grantor can change or dissolve a revocable trust but cannot alter an irrevocable trust once establishedIrrevocable trusts cannot hold real estateRevocable trusts provide better asset protection from creditorsA revocable trust can be amended or terminated by the grantor at any time. An irrevocable trust generally cannot be changed once created. This permanence is what gives irrevocable trusts their asset protection and estate tax benefits: you no longer control the assets.3. A revocable living trust provides asset protection from creditors during the grantor's lifetime:Always, because the trust is a separate entityOnly for assets over $1 millionNo, because the grantor retains full control, courts treat the assets as still belonging to the grantorOnly in states with trust-friendly lawsBecause you can revoke the trust at any time and reclaim the assets, courts consider revocable trust assets as still yours. Creditors can reach them. Asset protection requires giving up control through irrevocable structures. Check answers Retake quiz Back to lesson Next lesson →