Estate Planning Taxes

Q&A: What are the main differences between revocable and irrevocable trusts?

Revocable trusts are trusts in which provisions can be altered or canceled dependent on the grantor (or the originator) of the trust. During the life of the trust, income earned by the trust is distributed to the grantor, and only after death does property transfer to the beneficiaries of the trust.

Irrevocable trusts are trusts in which its terms cannot be modified, amended or terminated without the permission of the grantor’s named beneficiary or beneficiaries. The grantor, having effectively transferred all ownership of assets into the trust, legally removes all of their rights of ownership to the assets and the trust.

ProsCons
RevocableFlexibility/control for grantorNo tax advantage
IrrevocableEstate tax avoidance/reductionLack of flexibility/control for grantor

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