Revocable vs. irrevocable living trusts: Which one is right for you?

A revocable living trust allows you to retain control over the assets you've placed in the trust, but there are certain circumstances where an irrevocable living trust is the better option.

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by Belle Wong, J.D.
updated May 11, 2023 ·  4min read

Living trusts are popular tools in the estate planning process. There are two kinds of living trusts—revocable and irrevocable. To decide which type of living trust will work best for your particular circumstances, it's important to understand the differences between them.


What is a living trust

living trust is a trust that you create during your lifetime. The purpose of a living trust is to hold your assets while you're alive and distribute them according to your wishes at your death.

Contrast this with the testamentary trust, which isn't created until your death. While you do include all the details about the trust in your will, the testamentary trust isn't established when you execute your will. It's only after your death that the trust itself is created.

Trust terminology

Certain terms are common to all trusts that you should become familiar with. The creator of a trust is called the grantor or the settlor. The people to whom the assets of the trust will be distributed on your death are known as the beneficiaries.

And finally, the person in charge of administering the trust and distributing the assets is called the trustee. If you've also designated another trustee who will step in if anything happens to the first trustee, this second trustee is known as the successor trustee.

Revocable living trusts

As its name indicates, the revocable living trust is one that you can revoke, or cancel, at any time. However, the term "revocable" includes more than just the ability to terminate the trust. The revocable living trust lets you retain control over your assets even though it's the trust that owns them.

As the grantor of a revocable living trust, you can:

  • Modify any of the trust terms
  • Transfer assets in and out of the trust
  • Change your beneficiary or beneficiaries, trustee, and successor trustee

Additionally, many people designate themselves the trustee when they're setting up a revocable living trust. Other advantages of a revocable living trust include the following:

  • Avoiding probate. Because the trust owns the assets contained in the trust, these assets aren't subject to the probate process on your death.
  • Maximizing privacy. Assets going through the probate process are a matter of public record. By keeping your assets within the trust, you retain privacy over those assets and their manner of distribution.
  • Your incapacitation. With a living trust, you can designate someone to step in if you become incapacitated, either mentally or physically, and can no longer manage the trust.

Irrevocable living trust

The irrevocable living trust also functions as its name indicates. It's irrevocable, so once you've set up an irrevocable living trust, you give up the ability to do anything with it. Not only can you not terminate or cancel it, but you also can't make any changes to the trust.

Given its lack of flexibility, the irrevocable living trust isn't as popular within the estate planning process. Its irrevocability is its main disadvantage: once you transfer assets to the trust, you no longer control those assets.

There are, however, certain circumstances where an irrevocable trust might make sense, including the following situations:

  • Minimization of estate taxes. Certain types of irrevocable trusts can help you to reduce or eliminate estate taxes. The rules for these trusts can be complex, so it's always a good idea to consult with an attorney if your goal for your irrevocable living trust is to minimize estate taxes.
  • Medicaid eligibility. A government program such as Medicaid often includes specific thresholds that determine eligibility for the aid in question. By making your trust irrevocable, your beneficiaries are less likely to have their income or asset eligibility levels affected by the trust.
  • Creditor protection. Because it can't be terminated once it's set up, the irrevocable trust offers more creditor protection to both the settlor of the trust and the trust's beneficiaries than a trust that's revocable. If creditor protection is one of your objectives, then you may want to consider an irrevocable trust.

For most estate planning purposes, the flexibility of the revocable living trust will be a good option since it lets you retain control over the assets you've placed in the trust.

Depending on your specific circumstances or purposes, however, the irrevocable living trust might be the better alternative. But regardless of whether you opt for a revocable or irrevocable living trust, it's always a good idea to consult with an experienced estate planning attorney to help you set up your living trust of choice.

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Belle Wong, J.D.

About the Author

Belle Wong, J.D.

Belle Wong, is a freelance writer specializing in small business, personal finance, banking, and tech/SAAS. She spends h… Read more

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of the author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.