What Is the Difference Between Revocable and Irrevocable Trusts?

There are many differences between revocable and irrevocable trusts. Here are some of the common differences:

Revocable Trust: This type of trust, also known as a living trust, can be altered, amended, or revoked by the grantor (the person who creates the trust) at any time during their lifetime. As long as the grantor is alive and competent, they retain control over the trust assets and can change the terms of the trust as they see fit. The assets in a revocable trust typically pass directly to the beneficiaries (or to continuing trusts) upon the grantor's death, avoiding probate. A revocable trust does not provide asset protection for the Grantor, but it can provide asset protection for heirs and can provide estate tax benefits, particularly for future generations.

Irrevocable Trust: Once established, an irrevocable trust generally cannot be altered, amended, or revoked. The grantor relinquishes control over the assets and the terms of the trust. Since the assets are no longer under the grantor's control, most irrevocable trusts are not considered part of the grantor's estate for tax purposes, which can offer significant estate tax benefits. Additionally, irrevocable trusts can provide asset protection from creditors, depending on state laws and the specific terms of the trust.