irrevocable or revocable trust fund

Irrevocable vs. Revocable Trust Fund: What's the Difference?

When it comes to trust funds, you can get two different types: revocable and irrevocable. The two types vary quite a bit, and you don’t want to create an irrevocable trust fund unless you know exactly what you’re signing. Here are some key differences between these two types of trust funds.

Ownership of the Property

When you get a revocable trust fund, you retain ownership of your property throughout your lifetime. It isn’t until you pass and the property is bequeathed that you lose ownership of the assets in your trust fund.

When it comes to an irrevocable trust fund, the property is handled much differently. Assets in the trust no longer belong to you. When assets are placed in a trust, they are owned by the trust. Thankfully, you can still use items that are held by the trust. Most people choose to make an irrevocable trust to avoid estate taxes since the trust property transfers during your lifetime.


A revocable trust allows you to make changes as you see fit. You can change your successor trustee, beneficiaries and any assets located within the trust. This type of trust is perfect for someone who creates a living trust at a young age when your assets are subject to change.

An irrevocable trust does not allow change, amendment, or modifications. When you give an asset to someone to take, the item is no longer yours and is transferred to the individual, who takes ownership. There are some exceptional circumstances when an irrevocable trust can be changed, but only by the special power of appointment in the trust document.

Estate Taxes

Estate taxes are taxes levied on the net value of an estate after someone passes. With a revocable living trust, your property is taxed, and the amount is paid before the items and assets are distributed. This is not the case with an irrevocable living trust. Because you no longer hold ownership of the assets, it’s not included in the calculations of the total value of the property when you pass.

Protection of Assets

For a revocable living trust, your assets have little protection from claims from creditors, Medicaid, and divorcing spouses. After you pass, the assets you own are liable to become embroiled in legal disputes. Any disputes against your assets are removed before beneficiaries receive anything from your trust.

An irrevocable trust is handled much differently due to the fact you don’t hold ownership over the items when you pass. Because it’s held in the trust, legal claims are protected from anyone who feels as though they have a legal claim to your assets. 

Appointment of Trustees

With a revocable trust, the assets are still yours. When you appoint a trustee, this person will only gain control over your assets when you pass. They are bound by restrictions and provisions and distribute the assets according to your instructions. Until you pass, you retain complete control, and it is your duty to protect and manage your property.

With an irrevocable trust, the trustee is an individual chosen by the person who started the trust, or the grantor. This is done to create a fiduciary duty to protect and manage the assets. The provisions bind the trustee, so they don’t have complete control over your assets.

Last Updated: July 22, 2016