Which is better — a revocable or irrevocable trust?

Like most estate planning tools, the type of trust you use to protect your assets depends on your specific circumstances and needs. Overall, revocable trusts tend to be more common because of the flexibility they offer. However, there are some situations that align better with an irrevocable trust. A revocable trust may be better for you if: You think you may want to make changes to your trust down the road. Your estate’s value is below the federal estate tax exemption requirements. You’re positive you won’t want to make any changes after your trust is created. Your estate’s value is at or above the federal tax exemption requirements. If you’re unsure which option is best for you, you can seek the help of a certified estate planning lawyer . They’ll be able to better direct you toward the best options for you and your circumstances.

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Revocable vs. Irrevocable Trust: What’s the Difference?

Q: What’s a revocable trust?

A revocable trust, also known as a living trust , is a fund and document that outlines what your assets are and how you’d like them handled. Revocable trusts often name the grantor as the trustee, allowing for full control of the trust and the assets within it. What makes revocable trusts so attractive is the ability to make changes to them after they’ve been created. That means you can update your named beneficiaries, how much money or which assets are included, and when the contents of your trust will be distributed, as well as the standing of the trust itself.

Q: What’s an irrevocable trust?

An irrevocable trust, like a revocable trust, details your assets and how you’d like them to be distributed to your beneficiaries. However, unlike a revocable trust, irrevocable trusts are virtually immutable once the documents have been signed. There are some exceptions that allow for changes if all beneficiaries agree to them, but the proposed updates must go through a lengthy approval process, which can include going before a judge.

4 min read

Sep 19, 2023

One of the biggest differences between a revocable and irrevocable trust is your ability to make changes to the trust once it’s created. The grantor can modify a revocable trust, while an irrevocable trust is not as easily changed.

Both types of trusts can help protect your assets and allow you to leave them to specific beneficiaries. They each include a grantor, or the creator of the trust, beneficiaries who will receive your assets, and a trustee, who manages your fund and distributes the assets.

Understanding the difference between a revocable trust and an irrevocable trust can help you create a better, stronger estate plan for your needs. Let’s look deeper into revocable vs. irrevocable trusts to help determine which option may be the best fit for you and your estate plan.

What’s a revocable trust?

A revocable trust is a living trust that outlines the assets you want to give a beneficiary and how the assets will be distributed. Revocable trusts often name the grantor as the trustee, allowing for full control of the trust.

What makes revocable trusts so attractive is the ability to make changes to them after they’ve been created. That means you can update your beneficiaries, how much money or which assets are included, and when the contents of your trust will be distributed.

What’s an irrevocable trust?

An irrevocable trust, which can also be a type of living trust, details your assets and how you’d like them to be distributed to your beneficiaries. However, unlike a revocable trust, irrevocable trusts are pretty much set in stone. Some exceptions allow for changes if all the beneficiaries agree to them, but the proposed updates must go through a lengthy approval process, which can include going before a judge.

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Key similarities and differences between revocable and irrevocable trusts

One of the biggest differences between a revocable and an irrevocable trust is your ability to make changes to it after it’s been created. You, the grantor, can modify a revocable trust, while an irrevocable trust can't be easily changed.

But here are other important distinctions between the two — such as issues of privacy, tax benefits, and probate court. Here are some key differences:

	Revocable Trust	Irrevocable Trust
Can it be easily changed once created?	Yes. Revocable trusts allow for changes including who the beneficiaries and trustees are, what assets are included and instructions for asset distribution.	No. Once an irrevocable trust is created, it can’t be changed or canceled unless the beneficiaries sign off on the modifications (a court may also need to approve them).
Is it subject to estate taxes?	Yes. Because the trust is still under the grantor's ownership, it can be subject to estate tax.	Typically, no. By removing assets from your ownership into the trust, you may be able to help protect them from estate tax.
How long does the trust last?	Revocable trusts last as long as you want them to and can be canceled at any time. At the time of your death, a revocable trust becomes irrevocable.	Irrevocable trusts are permanent. They last for your entire lifetime and after you’ve passed.
Is it excluded from probate court?	Yes.	Yes.
Is it kept off the public record?	Yes, so you can keep your information (and that of your loved ones) private.	Yes, so you can keep your information (and that of your loved ones) private.

Review your revocable trust regularly

When it comes to revocable trusts, it’s good practice to review them every three to five years to make sure they still contain the assets you want in them and that the beneficiaries are still the same. For example, you may have grandchildren who you want to include in your trust.

If you’re debating between an irrevocable trust and a revocable trust, consider seeking the help of an estate planning lawyer. They’ll be able to direct you toward the best options for you and your specific situation.

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