What is the Difference Between a Revocable and Irrevocable Trust?

A revocable trust is one in which modifications can be made to retain control for the grantor over the assets placed into it. The grantor of this type of trust can change, amend, or even dissolve it at any time during their lifetime, and this feature provides flexibility. This kind of trust is very common in estate planning, as it enables a person to be in full control over their property during their lifetime, yet naming how such assets would be passed upon death. However, since the assets of a revocable trust remain in the grantor's control, they are generally not protected from creditors nor from claims against the grantor.

In contrast, an irrevocable trust is one that, once created, can in no way be amended or revoked, except under conditions that might be very specific, or the grantor gets consent from the beneficiaries. Property put into an irrevocable trust means this is the property that the grantor has lost control of. In that respect, the primary benefit of an irrevocable trust is that the assets are no longer treated as part of the grantor's estate and, therefore, are not subject to any creditor claims or, in some jurisdictions, reduce potential tax liabilities. In return, that lack of flexibility means careful planning is required prior to the establishment of such a trust.

In a nutshell, the fundamental variation between a revocable and an irrevocable trust relates to the level of control that the grantor continues to maintain in addition to the level of protection accorded to the assets held within. One Pacific Trust can assist in advising on the correct type of trust that will offer the particular asset protection and estate planning requirements one may have.