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Trusts are a popular estate-planning tool for simplifying the transfer of assets between generations, and two of the most popular types are revocable trusts and irrevocable trusts. Revocable and irrevocable trusts both provide control over asset management and protection against probate court and privacy, but they differ significantly in terms of flexibility and tax protection.

What is a revocable trust?

A revocable, or “living” trust is a commonly used type of trust that allows the grantor — the trust’s creator — to make changes, or even cancel the trust, based on their preferences. Revocable trusts are often used in estate planning to control and distribute assets as the creator gets older. For example, the creator can name themselves as the trustee and distribute trust property to themselves during their lifetime. The grantor’s children can be named trustees in the event of the grantor’s death, allowing them to distribute assets as directed. The trust can also be instructed to donate money to charity or establish a scholarship fund, as the grantor directs.

Revocable trusts can also be used to manage property if the creator becomes incapacitated. A successor trustee is named in the event of the creator’s inability to continue managing their affairs. This prevents a court from appointing a conservator to manage the creator’s affairs.


  • Easily amended, saving time and money: A grantor can quickly and easily move assets into and out of the trust by retitling the assets, and can alter the trust structure once it’s been established.
  • Allows for continuous management of assets in the event of incapacitation: Trusts can be managed by successor trustees or, as often happens, by those with a power of attorney for the trust’s creator.
  • Bypasses probate and preserves privacy: Trusts help heirs speed the estate through probate, which can otherwise take months, if not years. They also help keep the nature of the grantor’s assets private, especially valuable for those with greater wealth or other private family matters.
  • Grantor (the trust creator) can be a trustee: The grantor can act as a trustee during their lifetime, and is not forced to relinquish control of the assets placed in the trust.


  • Does not minimize estate taxes: If your estate is subject to estate taxes, the trust structure does not protect your assets from them. However, a revocable trust can provide language to create sub-trusts upon the death of a grantor (e.g. credit shelter or other irrevocable trusts) that can preserve or reduce future estate tax liabilities, particularly for revocable trusts with two grantors who are married.
  • Not shielded from creditors: If the grantor owes anything at the time of death, creditors can still pursue the trust for those obligations.

What is an irrevocable trust?

As the name implies, when an irrevocable trust is created, the assets are transferred to a trust that is very difficult to  change or be terminated by the person who created it. An irrevocable trust may be used when the creator is trying to limit estate taxes and protect assets from being taken by creditors since the trust’s assets are no longer considered theirs. The trust, rather than the creator, is considered the owner of the assets, and it holds those assets for the benefit of the beneficiaries.

Irrevocable trusts can be highly complex and offer a variety of options, particularly to those with substantial wealth who want to safeguard it. These trusts may also form the basis for dynasty trusts, which allow assets to move from generation to generation without generating estate tax.


  • Minimizes estate taxes: By transferring assets to an irrevocable trust, grantors may be able to eliminate estate taxes on assets that go into the trust, though it will not eliminate capital gains taxes on assets later taken out of the trust by the beneficiaries. This approach can be valuable if you have fast-growing stock, for example, that can go into the trust today but then later can avoid estate taxes.
  • Protects assets from creditors: By ceding ownership and control of the assets to the trust, the grantor can avoid the reach of creditors in some circumstances.
  • Can allow eligibility for government programs: By moving assets to the trust, the grantor may become eligible for means-tested programs such as Medicaid, though there may be significant lookback periods before the grantor can become eligible.
  • Bypasses probate and can maintain privacy: The trust structure can help heirs move the estate through probate quicker, and the trust can shield the nature of assets from the prying eyes of the public, especially valuable for those with wealth or private matters.


  • The trust cannot be canceled without the approval of all beneficiaries and the grantor: If a trust must be canceled, it requires the approval of all the beneficiaries and the grantor, potentially making it difficult to do.
  • It can be more difficult to establish than a revocable trust and requires an attorney: Irrevocable trusts can be quite complex and need the expertise of an experienced attorney to manage. There might be a need for a trustee with no beneficial interest, for example, and there are typically much more involved administrative requirements including a need for a separate annual tax filing.
  • Assets are no longer owned or controlled by the grantor: Placing assets in an irrevocable trust means the owner is ceding control of them, and the trustee then controls them (the grantor cannot be a trustee).
  • Higher taxes: Irrevocable trusts may be subject to much higher income tax rates than the individual income tax rates at the Federal level.

Is a revocable trust better than an irrevocable trust?

Which trust is better for you depends on your individual circumstances, and it’s important to work through your needs with a competent expert. If you want control and flexibility over the trust and have relatively basic needs, a revocable trust likely makes more sense. Some experts advise that you need relatively few assets — say $150,000 — for a revocable trust to make sense. The grantor can remain in control of the assets, it’s relatively easy to set up and amend, and it helps speed an estate through probate. You get a lot of the benefits of the trust structure without most of the potential hassles and drawbacks.

On the other hand, if asset protection and estate tax mitigation are more important, you’re probably best served by an irrevocable trust. For instance, this type of trust may be more valuable if you have fast-growing assets that you want to leave to heirs and sidestep estate taxes. But once established, an irrevocable trust can be difficult to amend or cancel, and it requires the grantor to give up control of the assets, a step that many individuals may be unwilling to take.

Whether one type of trust is better than the other depends on your needs and circumstances. That said, it’s not a binary choice — if you have the resources, you can have both types of trusts; you’re not limited to just one.

Bottom line

Revocable trusts offer benefits such as the ability to be easily amended, saving time and money by avoiding probate court, while irrevocable trusts offer the benefit of minimizing estate taxes and protecting assets from creditors. Whether one type of trust is better than the other depends on your needs and circumstances. Consider discussing your situation with a financial professional to help you decide.