when does a revocable trust become irrevocable - man thinking and looking at computer


When Does a Revocable Trust Become Irrevocable?

Revocable trusts offer many benefits, protecting your assets and keeping them out of probate. They also allow you to control and access the assets in the trust at any point during your lifetime. 

But in spite of its name, the time when you can amend (or revoke) a revocable living trust doesn’t last forever. Let’s take a look at when and how a revocable trust becomes irrevocable. 

Revocable vs. Irrevocable Trusts: What’s the Difference?

When you create a trust, you (the grantor) give another person (the trustee) the right to hold and manage the trust’s assets on behalf of its beneficiaries. 

Revocable Trusts

A revocable or “living” trust allows the grantor to amend the trust during their lifetime, as long as they aren’t incapacitated. Living trusts are very flexible, as you can add, remove, and access the assets at any time. You can even change the terms of the trust.

Irrevocable trusts

But with an irrevocable trust, the assets are not accessible—they cannot be removed, and the terms of the trust are set in stone. An irrevocable trust cannot be changed without a unanimous approval from the beneficiaries and/or a court order. 

When Does a Revocable Trust Become Irrevocable?

The Death of the Grantor

A revocable trust automatically becomes irrevocable upon the death of the grantor. Some married couples opt for a joint revocable trust, which does not become irrevocable until both spouses have passed away. 

When a trust becomes irrevocable, that means the successor trustee cannot make any changes to it. They can only administer the trust according to the grantor’s wishes. 

The Grantor Becomes Incapacitated

A revocable trust also becomes irrevocable if the grantor is still alive but has been incapacitated in some way. In this case, the successor trustee will carry out the grantor’s wishes regarding the assets in the trust, just as they would if the grantor had died. 

Choosing a Successor Trustee and POA

Along with appointing a successor trustee, it’s also important to name someone who can act as your power of attorney (POA). They will be able to make important medical and/or financial decisions on your behalf, depending on the type of POA you choose. If you like you can choose the same person to fulfill both roles. 

Irrevocable Trusts and Debt

Another benefit of an irrevocable trust is that debt collectors (typically) cannot go after the assets in a trust. For example, if you plan for the trust to remain in effect until your minor child turns eighteen, the assets will be protected until that time. However, the assets in a trust may still be vulnerable to creditors if the funds from the rest of your estate are not enough to settle your debts. 

Making Changes to a Trust

While you can change a revocable trust to an irrevocable trust before your death, the opposite is never possible—you cannot change an irrevocable trust to a revocable one. And, although you can move assets from a revocable trust to an irrevocable one, it doesn’t work the other way.

Wills and Trusts in Arizona

Do you need help setting up a revocable or irrevocable trust? The attorneys at Phelps LaClair are here to assist you. We’ve been helping Arizonans create successful wills, trusts, and other essential estate planning documents for over 40 years. Give us a call at 480-892-2488 today to schedule a free consultation.

Images used under creative commons license – commercial use (2/22/2023). Photo by bruce mars on Unsplash

Next webinar
starting soon