Trusts are one of the most powerful tools in estate planning, but choosing the right kind matters. The two most common types - revocable and irrevocable - sound similar but serve very different purposes. Understanding how they differ will help you decide which one fits your goals.
What Is a Revocable Trust?
A revocable trust (often called a "living trust") is a trust you create during your lifetime that you can change, amend, or cancel at any time. You typically serve as your own trustee, retaining full control over the assets you place in the trust.
Common reasons people create revocable trusts:
- Avoiding the time, cost, and public exposure of probate
- Maintaining privacy (unlike a will, a trust isn't filed with the court)
- Planning for incapacity - a successor trustee can step in seamlessly
- Coordinating distributions across multiple beneficiaries
The trade-off: because you keep control, the law still considers the assets yours for tax and creditor purposes. Revocable trusts offer no asset protection and provide no estate tax savings.
What Is an Irrevocable Trust?
An irrevocable trust, once signed and funded, generally cannot be changed or undone. You give up control of the assets, and a separate trustee manages them according to the trust terms.
Why give up that control? Because doing so unlocks benefits that revocable trusts cannot provide:
- Asset protection from creditors and lawsuits
- Medicaid planning - assets placed in an irrevocable trust at least five years before applying for long-term care benefits are typically not counted
- Estate tax reduction for high-net-worth families
- Special-needs planning for a disabled child without disqualifying them from government benefits
Side-by-Side Comparison
| Feature | Revocable Trust | Irrevocable Trust |
|---|---|---|
| Can you change it? | Yes, anytime | Generally no |
| Avoids probate? | Yes | Yes |
| Asset protection? | No | Yes |
| Medicaid planning? | No | Yes (after 5-year lookback) |
| Estate tax benefit? | No | Possible |
| Who controls assets? | You | Independent trustee |
Which One Is Right for You?
For most Florida families, a revocable living trust is the foundation of a solid estate plan - it avoids probate, plans for incapacity, and keeps things private. But if you're concerned about long-term care costs, lawsuits, or estate taxes, an irrevocable trust may be the better tool - sometimes used alongside a revocable trust.
The right answer depends on your assets, your family situation, and your goals. At Zacharia Frey PLLC, we help Southwest Florida families decide which trust structure (or combination) best protects what they've built. Schedule a consultation to talk through your options.
Frequently Asked Questions
Can I change or cancel a revocable trust after I create it?
Yes - that's the defining feature. You can amend, restate, or completely revoke a revocable trust at any time during your lifetime, as long as you have legal capacity. You can change beneficiaries, swap successor trustees, add or remove assets, or tear it up entirely. This flexibility is the main advantage over an irrevocable trust.
Does a revocable trust protect my assets from creditors?
No. Because you retain control, the law still considers the assets in a revocable trust to be yours for creditor purposes. If you're sued, divorced, or face a Medicaid spend-down, the assets are fully reachable. Revocable trusts protect against probate and incapacity - not against creditors. For asset protection, you need an irrevocable structure.
Are assets in an irrevocable trust counted for Florida Medicaid?
It depends on the trust terms. A properly drafted Medicaid Asset Protection Trust removes assets from your countable resources after the five-year lookback period - meaning they won't disqualify you from nursing home Medicaid. But the trust must follow strict rules: you cannot retain access to the principal, and the trustee cannot be you or your spouse. A homemade or generic irrevocable trust often fails this test.
Can I be the trustee of my own revocable trust?
Yes, and most people are. While you're alive and competent, you typically serve as your own trustee, retaining full control over the assets. You name a successor trustee to take over if you become incapacitated or pass away. This is what makes a revocable trust such a powerful incapacity-planning tool.
Do trusts avoid Florida estate tax?
Florida has no state estate tax and no inheritance tax, so a trust isn't needed for state tax purposes. For federal estate tax, only estates above the federal exemption (currently around $13.6 million per person) owe tax - and an irrevocable trust can sometimes reduce that exposure for very high-net-worth families. For most Florida families, revocable trusts are about probate avoidance and incapacity planning, not tax savings.
How much does it cost to create a trust in Florida?
A properly drafted revocable living trust package - including the trust, pour-over will, durable power of attorney, healthcare surrogate, living will, and HIPAA authorization - typically ranges from $1,500 to $4,000 depending on complexity. Irrevocable trusts cost more because they require careful drafting around tax, asset protection, and Medicaid rules. The cost is a fraction of what probate fees and unnecessary taxes would cost your family later.
Should I have both a revocable and an irrevocable trust?
Many of our clients do. The revocable trust handles everyday estate planning - probate avoidance, incapacity planning, and final distributions. The irrevocable trust handles specific protection goals - Medicaid asset preservation, life insurance proceeds (via an ILIT), or special needs planning for a disabled child. Combining the two can give you flexibility and protection where each is most needed.
Have Questions?
Schedule a consultation to discuss how this topic applies to your situation.
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