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

A trust is an estate planning tool that you may consider using if you want to go beyond drafting a last will and testament. One key thing to decide is whether to establish a revocable or irrevocable trust. Both have their pros and cons and one may be more appropriate than the other, depending on your financial situation and needs. If you’re thinking of adding a trust to your financial plan, it helps to know how the two compare and which situations each one is suitable for.

Do you have estate planning questions about trusts, wills or anything else? Consider speaking with a financial advisor today.

How Trusts Work

In simple terms, a trust is a legal entity that allows you to transfer assets to the ownership of a trustee.

Here are some key points to know:

A living trust allows you to direct the management of your assets during your lifetime and beyond.
Living trusts can be revocable, meaning they can be changed or revoked at your discretion, or irrevocable, meaning the transfer of ownership is permanent. The trustee assumes a fiduciary role, meaning that they’re required to act in the best interests of the trust beneficiaries while managing trust assets
You can act as your own trustee or name someone else to do so.

Beneficiaries are the people you name to benefit from the trust. So, for example, you might set up a trust fund for the benefit of your spouse or children. When you create the trust document, you can spell out exactly how you want the assets in the trust to be managed and distributed to beneficiaries. It’s the trustee’s job to make sure your wishes are followed.

Not everyone needs a trust; for some people, a last will and testament may be sufficient. But if you have substantial assets that you plan to pass on, either to your family members or as part of a charitable giving plan, a trust can make doing so easier.

Key Differences: Revocable vs. Irrevocable Trusts

There are many different types of trusts you can establish. For example, there are grantor trusts, A/B trusts, testamentary trusts, special needs trusts – but they all have one thing in common. All of these trusts are either revocable or irrevocable. Here’s a closer look at how they compare.

Revocable Trusts

A revocable trust is a trust that can be changed or terminated at any time during the lifetime of the grantor (i.e., the person making the trust). So that means you could:

Add or remove beneficiaries at any time
Transfer new assets into the trust or remove ones that are already in it
Change the terms of the trust concerning how assets should be managed or distributed
Terminate the trust completely

When you pass away, a revocable trust automatically becomes irrevocable. That means no further changes can be made to its terms.

Irrevocable Trusts

An irrevocable trust is essentially permanent and in most cases, cannot be changed for any reason. If you set up an irrevocable trust during your lifetime, any assets you transfer to the trust would have to remain in the trust. You couldn’t add or remove beneficiaries or change the terms of the trust.

There are numerous types of irrevocable trusts:

Irrevocable trusts can be a testamentary trust or a living trust. A testamentary trust is created in a last will and testament and comes into existence only after the settlor dies. Because a testamentary trust doesn’t take effect until after the settlor dies, he or she can make changes up until death, at which point the trust becomes irrevocable. The trust won’t transfer assets outside of probate since the grantor owns the assets at the time of death.

Pros and Cons of Revocable Trusts

A revocable trust can help you manage your assets during your lifetime and transfer them to beneficiaries after death.

Revocable trusts have advantages and disadvantages, both of which are important to weigh before adding one to your estate plan.

The main benefits of revocable trusts include:

Flexibility. A revocable trust allows you to make changes, whereas an irrevocable trust does not. That’s helpful if you’re concerned about your financial situation or needs changing at some point and you want to make sure your trust can still meet those needs.
Reassurance. A revocable trust can also offer peace of mind if you’re worried about becoming incapacitated and not being able to manage your assets. As long as your trust document is clear on what you want, then your trustee is bound to follow your wishes.
Probate avoidance. Probate is a legal process in which your estate is inventoried and your assets are distributed among your heirs, all of which is public information. Revocable trusts can allow your heirs to bypass probate once you pass away and keep the contents of your estate private

One downside is that a revocable trust doesn’t offer the same type of protection against creditors as an irrevocable trust. If you’re sued, for example, creditors could still attempt to attach trust assets to satisfy a judgment.

Also, assets in a revocable trust are part of your taxable estate, meaning they are subject to federal estate taxes when you die. Federal estate taxes are due for any amount above the current lifetime exemption, which in 2025 is $13.99 million for individuals and $28.98 million for married couples (up from $13.61 million and $27.22 million in 2024, respectively).

Trump’s tax plan preserves the higher estate tax exemption limits that were enacted in the 2017 Tax Cuts and Jobs Act (TCJA). Without new legislation, the thresholds would have dropped by approximately 50%. This move allows wealthier taxpayers to preserve more of their assets on a tax-advantaged basis through strategic gifting.

Pros and Cons of Irrevocable Trusts

An irrevocable trust can have its benefits but there are also some dangers to keep an eye on before deciding to move forward. Here are the most common pros and cons of an irrevocable trust:

Tax management. In addition to protecting assets from creditors, irrevocable trusts can also come in handy for managing estate tax obligations. From a tax standpoint, assets are owned by the trust, not you, which makes it possible to sidestep estate taxes.
Medicaid qualification. Holding assets in an irrevocable trust can also be useful if you’re trying to qualify for Medicaid to help pay for long-term care and want to avoid having to spend down assets. A Medicaid Asset Protection Trust (MAPT) can prevent certain assets from being counted toward your eligibility.

The downside of irrevocable trust is that you can’t change it, and it’s generally unadvisable to act as your own trusteeOnce the trust is set up and the assets are transferred, you no longer have control over them, which can be a huge danger if you aren’t confident about the reason you’re setting up the trust to begin with.

How to Decide Between Revocable and Irrevocable Trusts

Whether a revocable or irrevocable trust will work better for your estate plan depends on what you need a trust to do for you.

A revocable trust might be preferable when:

The value of your estate is less than the federal estate tax exemption
You want to retain the use of and control over your own assets without restriction after establishing the trust
You want the transfer of your assets to your heirs to be private and avoid the probate process in any state where you have assets

An irrevocable trust might be preferable when:

The value of your assets exceeds the federal estate tax exemption
You don’t mind giving up the use or control of your own assets after establishing the trust
You want to protect your assets from creditors. Since assets in an irrevocable trust aren’t considered available to you, they are protected from certain creditors and lawsuits.

Talking with an estate planning attorney can help you decide whether a revocable or an irrevocable trust is best or whether you even need a trust at all. From there, you can further explore the different trust options you can set up to manage your assets.a revocable or an irrevocable trust is best or whether you even need a trust at all. From there, you can further explore the different trust options you can set up to manage your assets.

How Trusts Fit Into a Broader Estate Plan

Revocable and irrevocable trusts can be useful tools, but they don’t function in isolation. A complete estate plan typically includes several other components that handle different aspects of financial and medical decision-making. For example, a trust doesn’t cover assets that haven’t been properly titled into it. That’s where a pour-over will comes in—it directs any remaining property into the trust upon your death.

You may also need to include a power of attorney to authorize someone to act on your behalf in managing finances or legal matters if you become incapacitated. Similarly, healthcare documents such as a living will or a medical power of attorney address situations where you can’t make your own treatment decisions. These documents are critical for situations that don’t involve the transfer of wealth but still affect your well-being and financial responsibilities.

Beneficiary designations are another key part of the plan. Accounts like retirement plans, life insurance policies, and payable-on-death bank accounts transfer based on these designations, not through a will or trust. If the designations are outdated, they can override your broader estate instructions.

Bringing all these elements together—trusts, wills, powers of attorney, healthcare directives, and beneficiary forms—creates a more cohesive and effective plan. This structure helps reduce delays, avoid unintended outcomes, and provide clarity for your heirs and decision-makers.

Bottom Line

Revocable trusts can be changed or canceled, while irrevocable trusts cannot be altered once created.

Revocable and irrevocable trusts can serve different purposes in an estate plan. They can be used alongside a last will and testament to make sure your wishes are followed. When considering a trust, think about what you need it to do for you and your beneficiaries in the short- and long term.

Tips for Estate Planning

Consider talking to your financial advisor about incorporating trusts and other estate planning tools into your financial plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
There are certain things a will can do that a trust can’t, so it’s important to make sure you’re covering all the bases in your estate plan. For example, you can use a will to name legal guardians for minor children.