Revocable vs. Irrevocable Trusts: What's the Difference?

The key difference between revocable and irrevocable trusts comes down to control and flexibility vs. asset protection and tax benefits.

Revocable Trust (Living Trust)

Definition: A trust that can be changed or revoked at any time by the person who created it (the grantor), as long as they are alive and competent.

Pros:

• Flexibility: You can amend or dissolve it at any time.

• Control: You maintain full control over the assets.

• Avoids Probate: Assets pass to beneficiaries without going through court.

• Privacy: Keeps your estate affairs out of public probate records.

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Cons:

• No Asset Protection: Creditors and lawsuits can still reach assets.

• No Tax Benefits: Assets are still considered part of your taxable estate.

  
  

Common Use Case:

• People who want to retain control of their assets but simplify inheritance for loved ones.

Irrevocable Trust

Definition: A trust that cannot be changed or revoked once it’s set up—without the permission of the beneficiaries (and sometimes court approval).

Pros:

• Asset Protection: Assets are shielded from creditors and lawsuits.

• Estate Tax Benefits: Assets are removed from your taxable estate.

• Medicaid Planning: Assets may be protected from long-term care spend-down (if transferred early enough).

  
  

Cons:

• No Flexibility: You give up control over the assets.

• Complexity: Requires careful planning and legal help.

  
  

Common Use Case:

• High-net-worth individuals looking to reduce estate taxes or protect assets.

  
  

Quick Comparison Table:

Feature	Revocable Trust	Irrevocable Trust
Can be changed?	✅ Yes	❌ No (without approval)
Avoids probate?	✅ Yes	✅ Yes
Protects from creditors?	❌ No	✅ Yes
Estate tax benefits?	❌ No	✅ Yes
Control over assets?	✅ Full	❌ Limited
Medicaid planning tool?	❌ Not useful	✅ Often used

For most people, a Revocable Living Trust is the best option, but Irrevocable Trusts do have their place.

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