Should I have a Revocable Trust or an Irrevocable Trust?
Revocable vs. Irrevocable Trust: Which One is Right for You?
One of the most common questions I hear from clients when they first consider estate planning is:
“Should I have a revocable trust or an irrevocable trust?”
For most people, a revocable trust is the best option. But to fully understand why, let’s break down the key differences between these two types of trusts and when each one makes sense.
What is a Revocable Trust?
A revocable trust is a flexible estate planning tool that allows you to:
✔ Maintain control over your assets – You can modify or revoke the trust at any time during your lifetime.
✔ Access trust assets – Any assets placed in the trust remain available for your use.
✔ Act as your own trustee – You can manage the trust yourself, ensuring full control over decisions.
This makes a revocable trust an excellent option for those who want to avoid probate, keep their estate plan private, and maintain control of their assets while ensuring a smooth transition for their beneficiaries.
What is an Irrevocable Trust?
An irrevocable trust, on the other hand, operates under much stricter rules. Once you transfer assets into an irrevocable trust, you:
✘ Can no longer access those assets
✘ Cannot serve as the trustee
✘ Generally cannot use those assets for your personal benefit
Since irrevocable trusts come with significant restrictions, they are typically used in specific situations, such as:
Nursing Home Protection – A client may place their home in an irrevocable trust to shield it from long-term care costs while naming an adult child as trustee.
Asset Protection – If you have assets you don’t want in your name or don’t want your children to own outright, an irrevocable trust may provide a solution.
Tax and Estate Planning Strategies – For high-net-worth individuals, an irrevocable trust can help reduce estate taxes or protect assets from creditors.
While there are some exceptions, carve-outs, and “escape hatches” that allow for limited flexibility in an irrevocable trust, these are complex and should be discussed with an estate planning attorney.
Which Trust is Right for You?
For most people, a revocable trust is the best choice because it provides flexibility, control, and ease of access. However, if you have specific concerns, such as protecting assets from nursing home costs, an irrevocable trust may be necessary.
If you’re unsure which trust fits your needs, or would like me to review or create a trust for you, then click the link below to schedule a call with me today - I’m always happy to help!
To learn 80% of what you need to know about estate planning in less than 30 minutes, check out my full-length video. It’s a quick and comprehensive guide to help you understand the basics and start taking steps to secure your future.
