“Should I set up a trust?” The useful counter‑question is “Which trust for which job?” For most U.S. families, the workhorse is the revocable living trust: it keeps you in control, provides incapacity continuity, and avoids probate. An irrevocable trust is a different tool, used selectively for tax, Medicaid, or asset‑protection goals—and it requires ceding control. This article compares the two in plain English so you can choose confidently.

Revocable living trust: control now, clarity later

A revocable living trust is created during life; you can amend or revoke it anytime while you have capacity. You are usually the trustee and beneficiary while alive; you name a successor trustee and remainder beneficiaries for after death. The practical benefits are threefold:

• Incapacity planning. If illness strikes, your successor trustee steps in using a certificate of trust and, if your document requires, simple physician letters. Bills get paid, property managed, and investments handled without a court guardianship.

• Probate avoidance. Assets titled to the trust pass under your private instructions; your family avoids court calendars and public filings.

• Customization. You can add sub‑trusts for minor children, spendthrift protections, and clear timing for distributions.

Taxwise, a revocable trust is typically a grantor trust: income is reported on your personal return; no separate tax identity is needed while you’re alive. At death, assets get the same basis treatment as if held in your name.

Irrevocable trust: control traded for specific benefits

An irrevocable trust generally can’t be changed easily once funded. Why give up flexibility? Because the law sometimes rewards separation. Examples include:

• Estate‑tax planning in very large estates, shifting growth out of your taxable estate.

• Certain asset‑protection strategies where state law respects a wall between you and assets placed in a properly structured irrevocable trust.

• Medicaid planning in states that allow assets placed beyond look‑back periods to be treated differently for eligibility (a highly technical domain requiring state‑specific counsel).

• Life‑insurance trusts (ILITs) to keep death benefits outside your taxable estate.

These benefits come with strings: you typically cannot be the trustee, cannot take principal back, and must respect formalities that prove the trust—not you—owns the assets. That’s a fair trade only when the benefit is real and you can afford to part with control.

What a revocable trust does not do (and common myths)

It does not shield assets from your personal creditors while you’re alive; you still control and benefit, so creditors can reach what you can. It does not automatically cut taxes—income or estate—beyond what ordinary ownership would do. It does not manage retirement accounts by taking ownership (those stay in your name) but it coordinates through beneficiary designations and powers for your trustee to work with your heirs.

Choosing between them: start with goals, not jargon

If your goals are private, efficient transfer, incapacity continuity, clear distributions to family, and simple tax reporting, you want a revocable living trust. If your goals include insulating a limited pool of assets from known categories of future risk, solving a specific estate‑tax problem, or meeting Medicaid eligibility rules, you may pair your revocable trust with a separate irrevocable trust for that targeted strategy. Most families do not need the latter; many benefit from the former.

Funding: the step both structures require

A trust—revocable or irrevocable—works only if you fund it. For a revocable trust, that means recording deeds for real estate, retitling non‑retirement brokerage accounts, assigning personal property, and aligning beneficiary designations for life insurance and retirement accounts to match your plan. For an irrevocable trust, funding is even more deliberate: gifts or sales to the trust, careful retitling, and documentation that respects the lines you just drew.

Drafting details that make revocable trusts hum

A good revocable trust includes (a) a crisp incapacity definition and easy triggers, (b) modern digital‑assets authority, (c) clear trustee powers (to invest, insure, settle claims, hire professionals), (d) practical distribution standards (“health, education, support, maintenance”), and (e) a path to resume control after temporary illness. Couples should decide between a joint trust (simple, one pot) and separate trusts (clearer tracking for blended families or separate property). Either can be designed to support a survivor while preserving a remainder for children—no court, no public file.

Drafting details that keep irrevocable trusts out of trouble

Irrevocable trusts live or die on respect for separateness. That means choosing an independent trustee (or co‑trustee) where needed, giving that trustee genuine discretion, and avoiding back‑door control (like informal promises to distribute on demand). If you fund with life insurance (ILIT), keep premium flows clean (e.g., annual gifts with beneficiary notices, administered properly). If the goal is asset protection, understand your state’s rules; sloppy transfers or transfers made when a claim is looming can be set aside.

Common combinations that work well

A family might use a revocable living trust for the home and investments and add a modest irrevocable life‑insurance trust to keep a large policy outside the taxable estate. A couple with a second marriage might use two revocable trusts with QTIP‑style provisions to balance support for the survivor and inheritances for children. A retiree concerned about future long‑term care might consult counsel about an irrevocable trust for a portion of assets, knowing that trade‑offs are real and timing matters.

Cost, complexity, and the “enough” test

Revocable trusts are relatively simple to establish and, once funded, simple to use. Irrevocable trusts are projects—more documents, more coordination, often separate tax filings, and higher professional involvement. The right question is not “What’s the fanciest plan?” It’s “What’s the least complex plan that meets our goals?” For many families, the revocable living trust paired with a pour‑over will, updated beneficiary forms, and current agent documents is the 95% solution.

A short path forward

Decide your goals; choose the trust that matches; execute with proper formalities; and fund the plan. If, later, your wealth or risk profile suggests an irrevocable layer, you can add one. Start with the tool that solves the problems you actually have.

Build the revocable living trust most families truly need: Online Revocable Living Trust → /product/online-living-trust/

Use templates and checklists for deeds, funding, and trustee hand‑off: Living Trust Kit → /product/living-trust-kit/

Round out your agents and backstop will: Living Will & Power of Attorney (Book) → /product/living-will-power-of-attorney/ • Online Last Will & Testament → /product/online-last-will/