There is often confusion surrounding the differences between “revocable trusts” and “irrevocable trusts” as both types are frequently used by estate planners. Although every trust prepared should be customized to fit the goals and family situation of the creator, below are general similarities and differences between the structure and uses of revocable trusts and irrevocable trusts.
Revocable Trusts:
- Probate avoidance benefits;
- Incapacity planning options;
- Legacy planning for beneficiaries;
- NOT a separate taxpayer during creator's life;
- Assets are generally not protected from creator's creditors;
- Creator can change trust terms during creator's life and capacity;
- Mostly unrestricted use of trust assets during creator's life and capacity;
- Assets included in creator's taxable estate; and
- Easier to set up.
Irrevocable Trusts:
- Probate avoidance benefits;
- Incapacity planning options;
- Legacy planning for beneficiaries;
- Potential separate taxpayer than creator – dependent on trust terms;
- Assets are generally protected from creator's creditors;
- Extremely limited ability to adjust trust terms after creation;
- More restrictions on use of trust assets;
- May be used to shift assets out of creator's taxable estate; and
- More complex to set up.
Our highly qualified attorneys are passionate about helping families navigate their estate planning options, including a detailed review of trust techniques which will assist in accomplishing each client's unique objectives. Contact us to learn more about our custom approach.
