Revocable vs. Irrevocable Trusts
Which is Right for Me?
When it comes to trusts, one of the key decisions you will need to make is whether your trust should be revocable. A revocable trust can be changed or canceled, while an irrevocable trust cannot. But in exchange for sacrificing flexibility, irrevocable trusts offer protections for which your family could be thankful.
A revocable trust allows the grantor to decide who should get their assets, as well as amend the terms of the trust as time goes by and life changes. A revocable trust is also commonly referred to as a living trust or an inter vivos trust. The grantor maintains control over the contributions to the living trust, and can even name themselves the trustee. And when the grantor passes away, assets in a revocable trust will bypass probate and all of its associated drawbacks.
Once you create an irrevocable trust, you can’t take it back. Unlike a revocable trust, you can’t serve as the trustee of your own irrevocable trust. Just like you can’t touch assets in an irrevocable trust once created, your contributions will similarly be protected from your creditors. When utilized correctly, irrevocable trusts can also offer tax benefits that aren’t available with revocable trusts. Just like revocable trusts, irrevocable trusts don’t need to go through probate, protecting privacy, avoiding disputes, and more.