Revocable and Irrevocable Living Trusts
Revocable Trusts vs. Irrevocable Trusts
Trusts can either be revocable or irrevocable. Each trust generally sets forth a provision which enables the Trustor to revoke the trust on the happening of one or more events. In a Revocable Trust, this revocation can occur at the will of the Trustor. This means anytime the Trustor decides to revoke the Trust, he/she can.
Irrevocable Trusts are those which cannot be revoked after they are set up. It is only with great care that irrevocable trusts are established, since once it is created, the Trustor deliberately gives up control over the revocation of the Trust. Why would anyone agree to give up direct control over certain assets and agree that once placed in a Trust the trust cannot be revoked? There are many reasons for this, not the least of which are often Internal Revenue Code provisions that dictate certain requirements for trusts in order to be recognized for special income tax treatment. Also, state laws often have certain requirements with respect to trusts and the irrevocability thereof, such that probate might be avoided in some circumstances. These provisions will be discussed in detail later in this section.
Realistically, there are many reasons for setting up trusts, and it is advisable before you establish a trust to examine the options and the requirements with a lawyer knowledgeable in this area. Only then can you make the right choice.