07 Jul Revocable vs. Irrevocable Living Trust
A trust is a valuable tool for asset protection, and each type of trust has its own unique advantages. Before we can establish which trust is best for you. It may be confusing or difficult to picture what life will look like for your loved ones after you pass. We are here to help you determine the best options available to you and your loved ones.
Living Trusts vs. Irrevocable Trusts
Revocable Living Trusts
These are the most common types of trusts created for individuals. A revocable living trust is a tool that helps you decide who will receive your property once you die. There are some key simple aspects to this type of trust including:
- It is called a living trust, because the trust is created while the grantor is alive and able to manage it.
- As the years go by, you may want to change certain parts of it. You may have gained or sold major assets, or decided to appoint a different successor trustee to take it over in the future. In these cases, it is good to have a revocable living trust because you can change the terms any time you wish.
- The trust itself does not need to have a tax ID, as the grantor can use their own social security number. Taxes on the trust are paid by the grantor during their lifetime, just as if they continued to have personal ownership of the assets.
- The trust automatically becomes irrevocable when the grantor dies, because they are the only person who can make changes to the trust.
Irrevocable Living Trusts
This trust is less popular, because the grantor gives up ownership and control of the assets that fund it. This type of trust is more of a gifting trust. Some of the advantages of an irrevocable living trust include:
- Assets in the trust are no longer the property of the grantor, which protects them from lawsuits and collectors.
- It can be used as part of a more complex estate planning strategy to reduce taxes.
- An irrevocable trust is far more difficult to contest in court.
- It can protect your beneficiaries from losing their inheritance to a divorce or an irresponsible guardian.
If you’re wondering which type of trust you need, make an appointment with Phelps LaClair. We can help you determine the best ways to protect your assets and preserve your wealth for your family’s future.
Photo by Scott Greer on Unsplash used with permission under the Creative Commons license for commercial use 11/7/25.