Revocable Living Trust vs. Irrevocable Trust: A Guide to Smarter Estate Planning

When it comes to securing your legacy and protecting your assets, creating a revocable living trust can be a smart move. This flexible estate planning tool allows you to manage your assets during your lifetime and ensure they are distributed according to your wishes after your death—without going through probate.

But how does it compare to an irrevocable trust? And which one is right for your needs?

At Doane & Doane, PA, our estate planning attorneys in Palm Beach County specialize in helping individuals and families choose the right trust based on their goals. Below, we explain the key differences between revocable and irrevocable living trusts to help you make the best decision for your future.

What Is a Living Trust?

A living trust—also called an inter vivos trust—is a legal arrangement created during your lifetime to hold and manage your assets. After you set up the trust, you transfer ownership of your assets into it. While you’re alive, you can use and manage those assets as you normally would.

When you pass away, the trust’s designated successor trustee takes over and distributes your assets to your beneficiaries—without going through probate court.

There are two main types of living trusts:

• Revocable Living Trust
• Irrevocable Living Trust

Each type offers unique benefits depending on your estate planning goals.

What Is a Revocable Living Trust?

A revocable living trust is one of the most flexible estate planning tools available. As the creator (grantor), you can make changes to the trust at any time—whether it’s updating beneficiaries, changing the trustee, or modifying how assets are managed and distributed.

This type of trust becomes irrevocable upon your death, meaning no further changes can be made. It is especially helpful for avoiding probate, planning for incapacity, and maintaining control over your estate during your lifetime.

Benefits of a Revocable Living Trust

1. Avoids Probate: Assets in the trust bypass probate, resulting in faster, private asset distribution.
2. Full Control: You can modify or cancel the trust at any time.
3. Privacy Protection: Unlike a will, a revocable trust does not become part of the public record.
4. Incapacity Planning: If you become unable to manage your affairs, your successor trustee can act on your behalf.

Limitations of a Revocable Living Trust

• No Creditor Protection: Since you retain control, assets in the trust are still vulnerable to lawsuits or claims.
• No Estate Tax Benefits: Assets remain part of your taxable estate.
• Requires Ongoing Updates: You must ensure assets are properly transferred into the trust.
• Upfront Costs: Initial setup may be more expensive than a standard will.
• Doesn’t Help with Medicaid Eligibility: Assets in a revocable trust are still counted when applying for long-term care programs.

What Is an Irrevocable Living Trust?

An irrevocable living trust offers less flexibility but provides greater asset protection. Once established, you can’t modify or dissolve the trust without the consent of all beneficiaries or a court order. You also give up ownership of the assets placed in the trust.

Despite the loss of control, irrevocable trusts offer significant tax advantages and protection from creditors, making them ideal for long-term planning and wealth preservation.

Revocable vs. Irrevocable Trust: Key Differences

Common Types of Irrevocable Trusts

1. AB Trust: Often used by married couples to minimize estate taxes by dividing the trust into two parts after the first spouse’s death.
2. Irrevocable Life Insurance Trust (ILIT): Removes life insurance proceeds from your taxable estate while still directing who receives the funds.
3. Charitable Trust: Allows you to donate to a charity while potentially providing tax advantages and income benefits.

Advantages of an Irrevocable Trust

• Creditor Protection: Assets are no longer legally yours, making them harder to claim in lawsuits.
• Estate Tax Reduction: Trust assets are not included in your taxable estate.
• Qualifies for Government Aid: May help meet asset requirements for Medicaid and other public benefit programs.

Drawbacks of an Irrevocable Trust

• No Personal Control: Once assets are transferred, they’re no longer under your direct ownership.
• Difficult to Amend: Changes require legal steps or beneficiary consent.
• Limited Access: You cannot freely use the trust’s assets for personal needs.
• Higher Setup Costs: Legal and administrative fees can be substantial.

Which Type of Trust Is Best for You?

Choosing between a revocable living trust and an irrevocable trust depends on your financial situation, family dynamics, and long-term goals.

• A revocable trust is ideal if you want to retain control, plan for incapacity, and avoid probate.
• An irrevocable trust is better suited for protecting wealth, reducing estate taxes, and qualifying for government programs.

Talk to a Revocable Living Trust Attorney in Palm Beach County

At Doane & Doane, PA, we help individuals and families across Palm Beach County create trusts that protect their assets and reflect their wishes. Whether you’re looking for the flexibility of a revocable living trust or the long-term benefits of an irrevocable trust, our experienced estate planning attorneys are here to guide you every step of the way.