Revocable and Irrevocable Trusts: Common Uses

September 24, 2010

A friend recently asked me about the differences between revocable and irrevocable trusts.  The following will provide a brief answer, including common uses along with advantages and disadvantages, but should not to be looked upon as exhaustive advice regarding either kind of instrument.

Revocable Trusts – A revocable (aka “living” or “inter-vivos”) trust is the most common “will substitute”.  While some clauses in the revocable trust are similar to those in an ordinary will, the key difference is that you can transfer all of your assets into the trust during your lifetime.  However, you would still maintain control of these assets and the ability to change or revoke the trust during your life.

A “pour-over will” is usually created at the same time.  Upon your death, it provides for the transfer of any of your assets not already held by the trust into the trust (such as personal effects or income received after death).

The main reason for doing all this is to avoid probate and enable your beneficiaries to receive your property relatively quickly and privately after your death.  To illustrate, when you create the trust, you would then transfer all your assets into it, including your home, checking accounts, savings accounts, etc.  You would still be able to go about your everyday business, but now your property is owned by the “Your Name Revocable Trust”.

The major benefits of this setup:

  • Avoids probate
  • Nearly immediate transfer of your estate after your death
  • Maintains privacy
  • Ability to monitor outside trustee’s behavior during your lifetime
  • Can be changed or revoked during your lifetime

The disadvantages include:

  • Complexity
  • Higher setup costs
  • Additional annual maintenance and costs
  • Does not save taxes
  • Some financial institutions don’t recognize or allow revocable trusts

Irrevocable Trusts – If your trust does not give the original donor (you) the ability to revoke the trust, the trust becomes irrevocable.  In such a case, any property that you surrender to the trust is treated as a permanent gift to a separate legal entity.  However, in exchange for the loss of control in your property, the differing kinds of these trusts can provide you with numerous ways to benefit you, your family or your businesses.

For instance, a fairly common setup is the “Irrevocable Life Insurance Trust” (aka “ILIT”).  Here, the trust is set up to own your life insurance policy and then pay your estate taxes.  To maintain the insurance, you “gift” the premium amounts into the trust, and it then pays the policy.  Upon your death, the ILIT, set up as the beneficiary of the insurance, then pays all your estate taxes.  As a result, your beneficiaries will essentially receive your estate tax-free.

Other types of irrevocable trusts include the “Minor’s Trust” (giving you control of when assets are disbursed to your children), the “Qualified Personal Residence Trust” (providing for the transition of your house to your children at a great reduction in gift taxes), and the “Dynasty Trust” (a type of ILIT that can hold compounding assets for generations).


  • Significant Tax Savings
  • Asset Protection
  • Flexibility in Types of Usage
  • Potential of Significant Compounding of Assets


  • Expensive to set up and maintain
  • Loss of control in your property
  • Generally cannot be changed

When getting your estate plan established, be sure to ask your attorney whether either type of trust is appropriate for your situation.

 Revocable and Irrevocable Trusts:  Common Uses


Scott R. Zucker, Esq. is the owner of The Zucker Law Firm PLLC, located just outside the Capital Beltway in Annandale, within five miles of the City of Fairfax, the county seat of beautiful Fairfax County, Virginia. The firm focuses mainly on estate planning services for Virginia, Maryland and Pennsylvania clientele, and seeks to do so in an affordable and approachable way. People interested in learning more can contact Scott by phone or email.

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3 Responses to Revocable and Irrevocable Trusts: Common Uses

  1. Brian
    September 8, 2011 at 9:02 am

    Nice site. I have a question. What act makes a irrevocable trust irrevocable? Is it the signing of the document by the maker,or the transfer of property by deed or other means, or the publishing of the document beyond the attorney-client privilege?

    • Scott
      September 20, 2011 at 9:25 pm


      Thank you for your question — it is certainly an interesting one and an issue to pay close attention to if you get involved with one.

      Generally, the trust becomes irrevocable once it is signed. The key characteristic of such a trust is that the original “grantor” has given up the right to revoke or amend the trust. At this point, the trust becomes a separate entity.

      However, if no assets are held by the trust, it is pretty much just a pretty document. Once the trust is given assets (in other words, when the “maker” or “grantor” has given up control of the assets given to the trust), the irrevocable trust becomes effective.

      I hope this helps.

      Take care,

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