Revocable Trust vs. Irrevocable Trust

There are many different types of trusts, but they all fall into one of two categories: revocable or irrevocable.

What is the difference between revocable and irrevocable trusts?

A revocable trust can be changed at any time by the grantor during their lifetime, as long as they are competent. An irrevocable trust usually can’t be changed without a court order or the approval of all the trust’s beneficiaries.

This makes an irrevocable trust less flexible. But an irrevocable trust can protect trust assets from certain creditors and estate taxes, while a revocable trust cannot. Below we’ll go over some nuances of each type of trust and give some examples of when you may prefer one over the other.

Revocable Trusts

A revocable trust, also called a RLT, is the most flexible type of trust you can make. With a RLT, you can revoke or change your trust at any point during your lifetime as long as you’re competent. For example, you could transfer more assets to your trust, add or remove beneficiaries, or sell trust property.

Many grantors name themselves as the initial trustee of their RLT, which lets them use and control their property while they’re alive. Once you pass away, your RLT becomes irrevocable, meaning it generally can’t be revoked or changed. At that point, your successor trustee will follow the instructions in your trust document to distribute your trust’s assets.

RLTs provide flexibility, which makes them a popular planning option. However, assets in a revocable trust are considered part of your taxable estate, which means they are subject to estate taxes when you pass away.

Revocable trust assets also aren’t immune to creditor claims and lawsuits against the grantor. This means any debts or legal settlements you owe when you pass away could be taken from the value of your trust. Only what’s left will be distributed to your beneficiaries.

Irrevocable Trusts

An irrevocable trust is a type of trust that, once executed, almost always requires court or beneficiary approval to change its terms. You transfer ownership of your property to an irrevocable trust in the same way as a revocable trust. But once your assets belong to the trust, you don’t have full freedom to make changes. Edits to an irrevocable trust usually require an agreement signed by the trustee and all of the trust’s beneficiaries, or a judge’s approval.

Irrevocable trusts are less commonly used in estate planning than revocable trusts. This is because of their inflexibility, and because the grantor loses full control over the assets in an irrevocable trust. Irrevocable trusts provide the most benefit to wealthy people, who often use them to minimize estate taxes and avoid certain creditor claims.

When you move your assets into an irrevocable trust, they’re often no longer part of your taxable estate. This means your estate won’t have to pay estate tax on them when you pass away. Irrevocable trusts may be most useful to those whose estate value is over the federal estate tax exemption (which is $13.99 million for individuals and $27.98 million for married couples in 2025).

Which type of trust is best for you?

The type of trust that’s right for you will depend on your situation. Revocable trusts are usually more common due to their flexibility, and the fact that most Americans’ estates won’t be subject to estate taxes.

You may want to consider a revocable trust if:

• You want the transfer of your assets to your heirs to be private and avoid the probate process
• You own real estate in multiple states and want to avoid ancillary probate in a state other than the one where you live
• You think your wishes for your assets will change over the course of your lifetime, and you want the freedom to swap beneficiaries
• You want to continue using and managing your own assets without restriction after you establish the trust
• The value of your estate is less than the federal estate tax exemption

You may want to consider an irrevocable trust if:

• The value of your assets is higher than the federal estate tax exemption and you want to avoid estate taxes
• You’re comfortable giving up use or control of your own assets after you establish the trust
• You want to protect your assets from future creditors. Since assets in an irrevocable trust aren’t considered available to you, they may receive protection from certain creditors and lawsuits

If you're interested, you can also create your revocable trust with FreeWill. Our documents are secure, easy to use, and valid in all 50 states. Learn more and get started today.