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One of the most common questions I get asked is: What is the difference between revocable and irrevocable? In my world, most people are referring to “Trusts” or other estate planning vehicles. And the it can be confusing, especially with so many terms floating around the Internet like; Revocable Living Trust, Irrevocable Children’s Trust, Revocable Will, Irrevocable Life Insurance Trust; Irrevocable Asset Protection Trust; Revocable Beneficiary; Irrevocable Beneficiary, and on and on. It’s no wonder people are confused.

Irrevocable vs. Revocable

So what do these terms really mean? Well let’s keep it very simple. Irrevocable mean that you cannot revoke it. You may think of it as irreversible, final or otherwise completed. Revocable, on the other hand, means that you can revoke it, or that it is reversible. Said differently, with a Revocable instrument you can change your mind and simply revoke it, whether it is a Will, a Trust, a Gift or even a Promise, whatever. And conversely, with an Irrevocable instrument, you cannot just change your mind, since you have irrevocably made the gift, will, trust, etc. The decision is final and irreversible and the gift stands.

When to use Irrevocable & Revocable

So why would we ever want to make an irrevocable decision if we can’t change our mind later? I mean, isn’t it better to keep your options open ? It depends on your goals. With a will or other document meant to dispose of your assets at your death, like a Revocable Living Trust, then yes, keeping your options open is very important. Most people change their mind or life situation many times before they die, so it makes complete sense to most often use a revocable instrument in that case.

On the other hand, if you want to reduce the size of your estate for tax purposes, then using a revocable gift or trust will not help you at all since the Tax Code will simply ignore the gift. In that case you must use an Irrevocable Trust, or gift to accomplish your task.

What about Asset Protection

So what about Asset Protection? Now that you understand the basic difference between revocable and irrevocable, which type of planning would you expect to stand up in an attack on your wealth? If you guessed irrevocable, you got it! Why? Well for the very same reason that a gift which is revocable is still considered by the IRS as yours, since you can take it back any time you want. An asset protection plan that you can revoke at your discretion would run into the same problem as a gift you could take back. A court could simply tell you to revoke your planning and poof – There goes your asset protection.

So in a nutshell, if you need flexibility and want to be able to change your mind, then you probably want to use a revocable plan. If you want to truly protect your assets, then for sure the only way to go is with an irrevocable plan. Which leaves us with one big question: “Is there a way to still have control of your assets, even if they are in an irrevocable asset protection plan?” The answer is YES, if you know how.

Douglass Lodmell

One of The Nation's Leading Asset Protection Attorneys

This Post Has 10 Comments

    1. Paulette,
      Volumes have been written about these two types of trusts and so we cannot provide particulars without understanding your specific objectives. You are always welcome to call us directly and we will try to assist you on which type of trust you might need depending on what your objectives are. When it comes to estate planning, a revocable living trust is the most common tool. When it comes to protecting assets, an irrevocable trust is often the effective strategy. When properly planned and drafted, both types of trusts can work seamlessly together to meet your needs and goals.

  1. In Wisconsin does a irrevocable or revocable trust have to be notarized if it has a place for a notary to sign and seal to make it legal???

  2. My Brothers and Sisters and I inherited a parcel of vacation property. We put it in a trust to be held for the family’s current and future use. I was elected by my siblings (the trustees) as the managing Trustee of the property.
    We now have gotten natural gas rights revenues for the property and I’m trying to apply on line for a federal tax ID to pay the taxes on this only form of income rather than pay it as a part of my state and federal taxes.
    My problem is that the application requires one name and one social security number for the grantor, while we have 7. As the managing trustee, will I be in trouble for only using my name as the Grantor?

  3. my aunt is 87 yrs. old. she had a car accident and needs round the clock caregivers. she is in the early stages of dementia. her will is being changed as we speak, and i am med. power of attny,power of attny., executor of her will. everything will be in trust. why would we not want a irrevocable will, as opposed to a revocable will. she has had family and unscrupulous investment people who have taken advantage of her in the past, and now with her memory going, whats preventing someone, caregivers, family, investors from getting her signature on documents or talking her into changing her will with a revocable?

  4. How does one access their own assets within an irrevocable trust/will? My mother’s attny has encouraged her to enter an irrevocable trust but now she has become very concerned about how she will be able to access her own funds while living and capable to do so.

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