The Differences between a Revocable and Irrevocable Living Trust





A living trust can be a very powerful tool in estate planning, one that can be used for your benefit while you are still alive. Living trusts have many uses, not the least of which is to avoid issues with probate, save money on taxes, establish long-term property management plans, or plan for circumstances like disability or incapacity. They are essentially a place for you to place some or all of your assets while you are alive.

When you hear the term “living trust”, it most likely refers to a revocable living trust, which is the most common kind. Less common are irrevocable living trusts; these terms can be confusing, so here is a brief guide to help you understand the differences.

Revocable Living Trust

A revocable living trust is very simply a living trust that can be amended or revoked by its creator or settlor at any time. Usually you would name yourself as the trustee and beneficiary of the living trust, and give yourself complete control over how the assets in the trust are to be used. You can control your assets in a revocable living trust much in the same way as you control them outside of the living trust; the only difference is that your assets are titled in the name of the trust.

The downside of a revocable living trust for some people is taxes. Since the trust owner controls assets in the revocable living trust, any income generated by the assets is considered taxable income of the trust owner. This means that you will have to pay taxes on the assets in your trust that generate income. To save money on income or estate taxes, some people consider an irrevocable living trust; however there are other issues to consider with this type of trust.

Irrevocable Living Trust

Alternately, irrevocable living trusts are living trusts that, once established, cannot be revoked or amended. Once you place your assets into an irrevocable living trust, they no longer belong to you. You must have an independent trustee for your irrevocable living trust, and you must specify that you will not control how the trust is administered, change the beneficiaries or amounts, obtain income from the trust, or make personal use of assets in the trust.

If you have assets that you wish to essentially ‘give away’ – for example, you could establish an irrevocable living trust that will eventually benefit your children – then you could consider this type of trust. The complications of irrevocable living trusts are worth it for some people as they allow you avoid or reduce tax on income from the trust and death taxes on assets in the trust.

These are simple overviews of revocable and irrevocable living trusts; if you have questions or concerns about living trusts or other estate planning matters, it is in your best interest to consult a qualified attorney. To speak with attorneys familiar with Pennsylvania living trust and estate planning laws, please contact the Pennsylvania law offices of Shields and Boris.

Elder Law Offices of Shields and Boris

109 VIP Drive

Suite 200

Wexford, PA 15090

Toll Free: (800) 879-0984

Phone: (724) 934-5044


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Elder Law Offices of Shields and Boris
109 VIP Drive
Suite 102
Wexford, PA 15090
Phone: (724) 934-5044
Toll Free: (800) 879-0984

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