When you’re thinking about planning your estate, trusts can give you more control over how your assets are managed and passed down. Two common types of trusts are revocable and irrevocable. Each comes with its own set of benefits and limitations.
Understanding a revocable trust
A revocable trust lets you stay in control. You can change the terms, remove assets, or cancel it completely at any time while you’re alive. People often choose this type of trust because it offers flexibility. If your life circumstances change, your trust can change, too.
You still have access to the assets in the trust, and they are counted as part of your estate for tax and creditor purposes. That means a revocable trust won’t protect your assets from creditors or reduce estate taxes.
How irrevocable trusts work
An irrevocable trust is much more permanent; once you place assets into it, you give up ownership and control. You can’t take assets back or change the terms unless all beneficiaries agree or a court approves.
This type of trust is often used to reduce estate taxes or protect assets from nursing home costs and creditors. Since the assets are no longer yours, they usually aren’t considered part of your taxable estate. In Pennsylvania, this can make a big difference in what your heirs receive.
Why the distinction matters
Your goals help determine which trust fits best. If you want flexibility and control, a revocable trust might work well. But if asset protection or tax benefits matter more to you, then an irrevocable trust could be the better choice.
Think ahead for better outcomes
Trusts offer powerful tools to manage your estate, but choosing the right one depends on what matters most to you. Make sure you understand how each works so your plans reflect your needs and protect what you’ve worked for.