When it comes to creating a comprehensive estate plan, a revocable living trust is one of the most effective tools to ensure your assets are protected, distributed according to your wishes, and kept out of probate court. But how does it compare to an irrevocable trust? Understanding the key differences between these two types of living trusts can help you make the right decision for your financial future and your loved ones.

At Doane & Doane, PA, our experienced estate planning attorneys in Palm Beach County help clients create customized trusts that meet their unique needs. In this article, we explore the benefits and drawbacks of both revocable and irrevocable living trusts, so you can decide which option is right for you.

What Is a Living Trust?

A living trust—also known as an inter vivos trust—is a legal document you create during your lifetime. Once it’s established, your assets are transferred into the trust and managed according to your instructions. You can use, spend, or invest the assets while you’re alive, and upon your death, your chosen trustee distributes the remaining assets to your beneficiaries—without the need for probate.

Two Main Types of Living Trusts

In Florida, there are two primary types of living trusts:

1. Revocable Living Trust

2. Irrevocable Living Trust

Each offers different benefits and limitations. The right choice depends on your goals, such as maintaining control over assets, minimizing estate taxes, or protecting assets from creditors.

What Is a Revocable Living Trust?

A revocable living trust is the most flexible type of trust available. As the grantor, you retain full control and can modify, amend, or revoke the trust at any time during your life. You can change beneficiaries, update the list of assets, assign a new trustee, or even dissolve the trust entirely if your circumstances change.

When you pass away, the revocable trust becomes irrevocable, and the successor trustee distributes your remaining assets according to your wishes—without going through probate.

Benefits of a Revocable Living Trust

1. Avoids Probate: Assets held in a revocable living trust are not subject to the probate process, saving time and money for your heirs.

2. Maintains Control: You keep full control of your assets while you’re alive and competent.

3. Flexible and Adjustable: You can make changes at any time if your situation or intentions evolve.

4. Privacy: Unlike a will, a revocable living trust is not a public record.

Disadvantages of a Revocable Living Trust

• Limited Asset Protection: Assets remain under your control, making them vulnerable to creditors and lawsuits.

• No Tax Benefits: A revocable trust does not reduce estate taxes or offer income tax advantages.

• Ongoing Maintenance: Requires continual updates to keep assets properly funded and documented.

• Higher Upfront Costs: Legal fees for creating and managing a trust can be higher than a simple will.

• Medicaid Planning Limitations: Assets in a revocable living trust are still counted when determining Medicaid eligibility.

What Is an Irrevocable Living Trust?

An irrevocable living trust is a more permanent estate planning solution. Once established, you relinquish control over the assets placed in the trust. You cannot amend or dissolve the trust without the consent of all beneficiaries or a court order.

While less flexible, irrevocable trusts offer stronger asset protection and potential tax benefits.

Key Differences Between Revocable and Irrevocable Trusts

Common Types of Irrevocable Trusts

There are several types of irrevocable trusts that serve specific estate planning purposes:

1. AB Trust – Used by married couples to minimize estate taxes by splitting the trust upon the first spouse’s death.

2. Irrevocable Life Insurance Trust (ILIT) – Removes life insurance proceeds from your estate to reduce taxes.

3. Charitable Trust – Allows you to donate part or all of your estate to a charity while potentially receiving tax benefits.

Benefits of an Irrevocable Living Trust

• Asset Protection: Assets are no longer legally yours, shielding them from creditors or lawsuits.

• Estate Tax Reduction: Assets in the trust are not counted in your taxable estate.

• Government Program Eligibility: Helps lower your taxable income to qualify for programs like Medicaid or disability benefits.

Disadvantages of an Irrevocable Trust

• Loss of Control: You cannot change or access the assets for personal use.

• Complex Setup: Changes require legal assistance and beneficiary agreement.

• Higher Costs: Legal and administrative expenses can be significant.

• Inflexibility: Once created, the terms of the trust are difficult to alter.

Which Trust Is Right for You?

Choosing between a revocable living trust and an irrevocable living trust depends on your individual goals, family situation, financial needs, and future concerns. A revocable trust is ideal if you want flexibility, control, and probate avoidance. An irrevocable trust, on the other hand, is suited for those seeking tax savings, asset protection, or long-term planning for government benefits.

Speak With a Revocable Living Trust Lawyer in Palm Beach County

At Doane & Doane, PA, we offer personalized legal guidance to help you select and create the right type of living trust. Whether you’re interested in the flexibility of a revocable living trust or the asset protection of an irrevocable trust, our experienced estate planning attorneys are here to help.

We combine the resources of a large firm with the personalized service of a boutique practice. With nearly two decades of experience, we understand the sensitive nature of estate and probate matters and are committed to helping you secure your legacy.