Difference Between A Revocable Trust vs Irrevocable Trust

Posted by smith clea on August 8th, 2022

A trust can be used in one of two ways; as either a revocable or an irrevocable trust. 

Each type of trust has its advantages and disadvantages, so you should carefully consider which one best fits your needs before making any decisions about your estate planning. 

This guide will help you understand the difference between a revocable and an irrevocable trust, and when it’s most appropriate to use each one.

Who Needs A Living Trust?

Almost anyone can benefit from having a living trust, especially if they want to avoid probate. 

If you have a large estate, a complex financial situation, or own property in many states, a living trust can be especially helpful. 

Even if you don't think you need trust now, creating one can give you peace of mind knowing that your affairs are in order and your loved ones will be taken care of after you're gone.

What Is An Irrevocable Trust?

An irrevocable trust is a type of trust that cannot be modified or terminated by the grantor without the consent of the beneficiaries. 

This means that once the trust is created, the grantor gives up all control over it and its assets. 

The trustee is then responsible for managing the trust according to the terms outlined in the trust agreement.

What Is A Revocable Living Trust?

A revocable living trust is a legal document created by an individual, also known as the grantor or settlor. 

The trust holds assets for the benefit of named beneficiaries. 

The grantor retains the power to revoke or change the terms of the trust at any time. 

After creating a revocable living trust, the grantor would be able to do whatever they wanted with their property and other assets that were in their name before the trust was created. 

Assets put into a revocable living trust would not pass through probate and would still be considered owned by the grantor after their death.

Tips For Creating An Effective Estate Plan:

No matter your age or financial situation, it's important to have an estate plan. 

This document will outline your wishes for what should happen to your belongings and loved ones when you die.

There are two main types of trusts- revocable vs irrevocable trust. 

A revocable trust can be changed or revoked at any time, while an irrevocable trust cannot be changed once it has been created.

Advantages Of Revocable Living Trust

1. Avoid Probate After Death
2. Avoid Court Proceedings
3. Protect Assets From Lawsuits
4. Provide for Specific Individuals Or Uses
5. Transfer Assets at Any Age

Final Thoughts On Wills And Living Trusts

A will is a document that says who gets what when you die. 

A living trust, on the other hand, can do that and also help you avoid probate.

Probate is a court-supervised process for distributing your assets after you die. 

If you have a living trust, your assets can be distributed without going through probate.

A revocable trust becomes irrevocable when the person who created it dies or becomes incapacitated.

About The Author

Clea Smith is a USA-based author on Legal issues related to estate planning, will & trust, business law, and elder law. Clea Smith does her best writing on these topics that help users to find the best solutions to their FAQ on estate planning attorney, probate, living trust vs will, and more about legal family issues.