Estate planning is the heart-to-heart talk we all procrastinate, but once you recognize how beneficial estate planning documents can be for the people you adore, you’ll want to make an appointment to draft your documents ASAP. Taking the time to create a trust should feel more like drafting a love letter to the people you love most in this world, instead of a dreaded chore you must accomplish. A trust is simply a legal container where you place valuable assets, appoint someone to manage them, and specify who benefits and when. But why would I even need a trust? And what’s the difference between a revocable trust and an irrevocable trust? Read on to learn the answers to your questions and to learn more about trusts.
What is a living trust?
A living trust is a legal tool that allows you to transfer ownership of your assets to a trust while you’re still alive. The creator of the trust, also called the “grantor” or the “settlor,” has the ability to guide and manage the assets within the trust, and, in some cases, avoid the lengthy and costly process of probate after death. Testamentary trusts, on the other hand, are created in a will and don’t kick in until after you have passed away. There are two types of living trusts: a revocable trust and an irrevocable trust. Each serves a different purpose.
But first, what is a trustee?
A trustee is the person, or in some cases, an institution, who steps into the driver’s seat of your trust. Think of them as the financial grown-up tasked with managing and distributing the trust’s assets according to the rules you’ve written. In a revocable living trust, you’ll likely name yourself as the initial trustee so you can stay in control of your property during your lifetime. But you’ll also name a successor trustee, who takes over if you become incapacitated or after you pass away, ensuring a smooth transition and management of the trust.
In an irrevocable trust, someone other than the grantor typically serves as the trustee from the start. That’s because by setting up this type of trust, you’re giving up direct control of the assets in exchange for legal and financial protections—such as asset shielding or tax benefits. Trustees carry a fiduciary duty, which is a formal and legally binding obligation to act in the best interests of the trust’s beneficiaries. That means no commingling of funds, no favoritism, and no skipping out on recordkeeping or responsibilities.
Choosing the right trustee is critical. While they don’t need to be a legal or financial expert, they do need to be reliable, organized, capable of handling money responsibly, and most importantly, they need to be trustworthy. It’s right there in the name! Whether you select a close family member, a trusted friend, or a professional fiduciary, the ideal trustee is someone you believe will carry out your wishes with integrity, diligence, and compassion.
Revocable living trusts
If you value flexibility, control, simplicity, the ability to manage your assets– and you’re not concerned about shielding assets from creditors or minimizing estate taxes–a revocable living trust (often just called a “living trust”) is probably the best option for you. Creating a revocable trust is like being the CEO of your own financial startup. You get to be both the grantor and the trustee, meaning you retain full, unrestricted control over your assets while you’re alive and mentally capable. If, down the road, you decide to remove or update assets, or even revoke the trust entirely, you can do so easily. You can add or remove assets at any time, change beneficiaries, or alter the terms as your needs evolve.
These trusts shine in several ways. First, they help avoid probate, allowing beneficiaries to receive assets more quickly and privately, bypassing the courtroom drama. This saves time, reduces costs, and protects privacy. Second, if you’re no longer able to manage your affairs, your successor trustee can seamlessly step in so you and your family avoid the expense and fuss of conservatorship. Unlike a will, which becomes part of the public record, a trust remains private, and distributions can occur quickly and quietly. As discussed above, make sure to choose someone you know and trust and who is responsible and financially capable enough to understand and manage your trust wisely.
The downside to revocable trusts
Plot twists happen, and a revocable trust gives you the power to adjust accordingly. That flexibility isn’t free though. Here are a few downsides to be aware of, especially if you’ve decided that a revocable trust is the right fit for your estate planning needs.
No asset protection
First, revocable trusts don’t offer asset protection from creditors, lawsuits, or divorce claims. Since you retain ownership and control of the trust assets during your lifetime, they are fair game if someone sues you or if you have outstanding debts. If you’re hoping to shield your assets, you’d need to explore an irrevocable trust, which does offer those protections. But, as you learn below, there are quite a few strings attached in an irrevocable trust.
There are costs involved
Second, there are upfront costs and administrative headaches. Setting up a revocable trust typically costs more than drafting a simple will, especially if you’re working with an estate planning attorney to get it done properly. Additionally, you’ll need to “fund” the trust—which means transferring ownership of your assets (such as real estate, bank accounts, and investments) into the name of the trust. If you skip this step, those assets won’t be governed by the trust and may still have to go through probate.
No tax advantages
Third, revocable trusts do not provide any income or estate tax benefits. Because you maintain control of the assets, they’re still considered part of your estate for income and estate tax purposes. In contrast, some irrevocable trusts can be used as tax-saving vehicles, particularly for high-net-worth individuals looking to reduce their taxable estate or shift wealth across generations. In 2025, the IRS set the threshold for estate tax at $13,990,000. This means that if your estate is valued at less than this amount, your estate will not be taxed at the federal level. But know that if your estate creeps up above that threshold, you will incur an estate tax.
Supplemental estate planning documents
A trust is a powerful part of a complete estate plan, but it’s not a one-stop shop. It’s important to know that revocable trusts don’t eliminate the need for other documents. You’ll still need a pour-over will, a power of attorney, and advance health care directives. These fill in the gaps and provide critical protections that a trust alone cannot.
Pour-Over Will
A pour-over will is like your estate plan’s safety net. If you set up a living trust but forgot to move an asset into it (i.e. a car or bank account), the pour-over will step in. It “catches” those forgotten assets and directs them into your trust upon your death. It’s basically a backup plan that ensures everything ends up where it was intended even if you missed a step during your lifetime.
Power of Attorney
A power of attorney (POA) lets you legally appoint someone you trust (called your “agent” or “attorney-in-fact”) to make financial or legal decisions on your behalf if you become incapacitated. This could include managing your bank accounts, paying bills, or handling investments. It can be tailored to kick in immediately or only if you’re declared mentally or physically unable to manage your own affairs. Choosing the right person to make these decisions can provide a significant peace of mind.
Advance Health Care Directives
Advance health care directives (aka “a living will” or “medical power of attorney”) allow you to spell out your medical wishes in advance and name someone to make health care decisions if you’re unable to. This could include decisions about life support, resuscitation, organ donation, or specific medical treatments. It ensures your loved ones aren’t left guessing what you would want and that your personal values are honored when it matters most.
Together, these additional documents help round out your estate plan, covering scenarios that a will or trust alone just can’t handle. They make sure your wishes are respected, your finances stay in order, and your loved ones aren’t left navigating a confusing legal mess during already tough times.
To summarize, revocable trusts are fantastic tools for avoiding probate and planning for incapacity, but they don’t offer asset protection or tax savings, and they come with a bit more homework. Think of it like upgrading from a simple toolkit to a full-blown workshop. It gives you more control, but you have to know how to use the tools and maintain them. Now, let’s take a look at irrevocable trusts.
Irrevocable Trusts
With a revocable trust, you’re the boss. You stay in full control. But with an irrevocable trust, it’s more like you’re locking valuables in a bank vault and handing over the keys. Once assets are transferred into it, they leave your name and control, and you generally can’t change your mind down the road. That may sound like a big sacrifice, but for the right people and situations, the tradeoff is well worth it. Let’s explore why someone might opt for an irrevocable trust over a revocable one, and what makes them such a powerful estate planning tool.
Asset protection with teeth
The most compelling reason people create an irrevocable trust is for asset protection. Once you transfer assets into the trust, they are no longer legally yours. They belong to the trust. That means creditors, lawsuits, and even divorce settlements (in certain cases) generally can’t touch them. This is especially appealing to high-net-worth individuals, business owners, or anyone in a profession prone to litigation (i.e. doctors, lawyers, or architects). The irrevocability adds a layer of protection that a revocable trust simply can’t offer. Because with a revocable trust, you still retain control and can change things anytime, which makes the assets fair game in many legal scenarios.
Estate tax savings
For individuals with large estates, minimizing estate taxes is a major motivator. This is a key estate tax planning strategy. Assets placed in an irrevocable trust are typically removed from your taxable estate. That means when you pass away, those assets aren’t counted toward your estate’s value for tax purposes. This can translate to substantial savings, particularly at the federal level for estates over the federal exemption limit, and in states that levy estate or inheritance taxes. As discussed above, the 2025 threshold for estate tax is $13,990,000. If your estate is more than this amount, you should look into an irrevocable trust for some of your assets.
Medicaid planning and long-term care
Irrevocable trusts are powerful tools for Medicaid planning, especially for those concerned about the high cost of long-term care. In many states, assets placed in an irrevocable trust at least five years before applying for Medicaid are not counted when determining eligibility. This allows individuals to qualify for government long-term care benefits while preserving assets for their children or heirs. But be warned, this has to be done with foresight, because improper structuring or timing can disqualify you from Medicaid benefits. Consult a legal professional in your area who has experience with Medicaid and estate planning.
Control over wealth and legacy
With an irrevocable trust, you can set strict terms and timelines for how your wealth is distributed, even long after you’re gone. Want your children to receive money in phases (e.g., at age 25, 30, 35)? Want to protect a loved one with special needs? Or, want to protect a child or grandchild from their own poor financial habits, creditors, or a divorcing spouse? You can customize how and when distributions occur, protecting beneficiaries from themselves or from external threats like lawsuits or divorces. This is a way you can continue to guide and love your family after you’ve passed.
Charitable giving and legacy building
If giving back is part of your legacy, charitable trusts are a compelling way to make an impact. Irrevocable trusts options such as Charitable Remainder Trusts (CRTs) or Charitable Lead Trusts (CLTs), allow you to support causes you care about, enjoy some tax perks, and possibly generate income during your lifetime, all while reducing the size of your taxable estate. Not every estate plan needs to end with family. Sometimes the most meaningful legacies are left to communities, missions, or organizations that touched your life. Charitable irrevocable trusts allow you to blend generosity with financial strategy.
Privacy and probate avoidance
Like revocable trusts, irrevocable trusts help avoid probate. Probate is a public, time-consuming, and often expensive court process. Countless family members have suffered through the expense and stress of a long-term probate experience after their loved one has died. If you value privacy, remember that the assets in an irrevocable trust are no longer part of your estate. This offers an extra layer of privacy and finality that some families appreciate.
What’s the downside to irrevocable trusts?
While irrevocable trusts pack a punch when it comes to asset protection and tax advantages, they’re not exactly the “set it and forget it” dream for everyone. These trusts come with real trade-offs that should be carefully considered before moving forward.
Lack of control and inability to change
The very thing that makes irrevocable trusts powerful, the fact that you give up control, is also what makes them tricky. Once assets go into an irrevocable trust, they’re no longer yours to tinker with. Want to sell your beach house or cash in that vintage car collection? Not so fast! You’ll need the trustee’s approval, and depending on how the trust is written, you may be completely out of luck. Plus, making changes down the road is a legal headache and often impossible without court involvement or unanimous beneficiary consent.
Potential regrets if your needs change
If life throws you a curveball like a new marriage, a surprise grandchild, or a sudden need for liquidity, you might wish you’d left yourself more flexibility. That’s why irrevocable trusts are best for people with very clear long-term goals, solid financial footing, and a willingness to trade control for protection. If you’re considering creating an irrevocable trust, imagine that you’ve locked those assets in a vault and thrown away the key with no ability to access them in your lifetime. This sounds extreme, but if your finances and family would be fine in this scenario, then a lack of managing capabilities might not be a big downside for you.
Costly to set up and maintain
Irrevocable trusts are more complex to set up and maintain than revocable trusts. They may require their own tax ID number and annual tax filings, appointing an independent trustee, and careful documentation. You’re trading autonomy for long-term safeguards, but for clients with higher net worth or liability risks, that’s a trade worth making. Consult financial and tax advisors and find a reliable estate planning attorney who’s experienced in irrevocable trusts to guide you on this journey. What happens to your assets while you’re alive and after you’re gone is too important a topic to approach haphazardly.
How the Two Compare
Revocable trusts offer flexibility and control, which is great, but that control comes at a cost of less protection. If you’re concerned about taxes, creditors, long-term care costs, or want to set firm conditions on your legacy, an irrevocable trust can be a powerful solution. It’s a trade-off between control now versus protection and peace of mind later. Of course, this isn’t a one-size-fits-all situation. Irrevocable trusts are best suited for people with specific concerns or complex planning goals. And because they’re hard (but not impossible) to modify, it’s wise to consult with an estate planning attorney to make sure it’s structured correctly from the get-go.
In practice, the choice often comes down to your goals. A revocable trust is great for keeping things simple, maintaining control, and ensuring ease of transfer without probate. On the other hand, if you want to shield assets, minimize taxes, or set up a legacy structure that lasts long beyond your lifetime, an irrevocable trust gives you those powers.
Comparing logistics
Regarding logistics, setting up a revocable trust is usually straightforward. You draft the document, place your main assets into it (i.e., a house or investment accounts), name a successor trustee, and fund it over time. Many people also use a “pour-over will” to catch any assets not transferred before death. Conversely, an irrevocable trust requires serious deliberation. Once assets move in, your relationship to them is fundamentally altered. You’ll choose someone else, not yourself, to manage the trust, handle administrative duties, and perhaps even tax responsibilities. But because those assets are legally out of your hands, they’re often out of reach from lawsuits, nursing-home costs, or probate courts.
Hybrid option
If both trusts seem appealing for different types of assets, you can always take advantage of both. Many people choose a hybrid approach. You can have a revocable trust that transitions into sub‑trusts, including irrevocable ones, upon death. This offers the best balance of control now and protection later. You might actually get to have your cake and eat it too! Consult an estate planning attorney to help you determine if this hybrid option could be the best solution for you.
What are the requirements for a valid trust?
Trust law varies a little by state, but most follow the Uniform Trust Code (UTC). Section 402 of the UTC lists the following requirements for a valid and enforceable trust:
- There must be clear intent by the settlor to create a trust.
- The trust must have a definite beneficiary (with limited exceptions)
- The trustee must have duties to perform.
- A trust isn’t created if the same person is the sole trustee and sole beneficiary.
Make sure you research and talk with an estate planning attorney about the requirements for a valid trust in your state as they each have slightly different rules. California, for example, requires written evidence for trusts involving real estate and doesn’t allow indefinite purpose trusts unless they’re for animals or certain non-charitable causes (Cal. Prob. Code § 15200). And, Texas’s version of the UTC explicitly authorizes directed trusts, which is where someone other than the trustee can direct investments or distributions (Tex. Prob. Code. §114.003).
Can trusts be challenged?
Both types of trusts can be challenged, but the grounds and timing differ slightly. Revocable trusts, in particular, can be contested after your death on grounds like undue influence, lack of capacity, or improper execution. Irrevocable trusts are generally harder to contest, given their permanence. But challenges can still arise if the trust was improperly signed or founded on bad faith. Courts across the country routinely refer to trust statutes to interpret beneficiary rights, trustee obligations, and contest rules. Internationally, the U.S. also recognizes foundational case law like the Claflin doctrine, which prevents courts from altering a trust in ways that go against the grantor’s material purposes. While not directly U.S. law, it underscores a global respect for trust integrity.
Final thoughts on living trusts
Living trusts are powerful and essential tools when thoughtfully tailored to your goals. Choosing between revocable and irrevocable trusts is about aligning trust structure with your values and legacy. And just like a prenup, it helps foster clarity and communication for you and your loved ones. By planning out your estate, you are preventing stresses that could cost you family time, money, and potentially relationships with each other. In building your estate plan, focus on your goals. If your main goal is to avoid probate, keep flexibility, and stay in control during your lifetime, go with a revocable trust. If you need to protect assets, reduce exposure to creditors, or optimize tax planning, then an irrevocable trust may be appropriate. If both types of trusts fit the bill for different assets, then consider a hybrid approach.
Most importantly, these decisions shouldn’t be made in isolation. Consult with an estate planning attorney to evaluate your financial picture, your goals, and your family dynamics. A well-crafted trust is more than a legal tool—it’s an act of protection, intention, and love for those who matter most.
Katherine (Kathy) Bakes is the founder and managing attorney of Bakes Law LLC. Her eleven years of practice involves all aspects of family law, including the formation of prenuptial and postnuptial agreements, divorce and legal separations, child custody, child support, and visitation agreements, spousal support and financial settlements. Kathy also engages in the practice of estate planning including the formation of wills, revocable and irrevocable trusts, durable powers of attorney, health care proxies, HIPAA authorizations and living wills. Kathy is a member of both the Connecticut and Massachusetts state bars after receiving her Juris Doctorate degree from New England Law | Boston. Kathy lives in Southport, CT with her husband and toddler. Outside the office, Kathy enjoys playing the piano and teaches music education to students of all ages.
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