Revocable vs. Irrevocable Trusts: Which One Is Right for You in California?

When creating an estate plan in California, one of the most important decisions you may face is choosing between a revocable trust and an irrevocable trust. Both tools help manage and protect assets, but they serve different purposes and carry unique benefits and limitations. Understanding how each works can help you decide which trust aligns with your goals.

What Is a Revocable Trust?

A revocable trust (also known as a living trust) allows the creator to maintain control of the trust and make changes during their lifetime. Assets can be added or removed, beneficiaries can be updated, and the trust itself can be revoked entirely.

Benefits of a revocable trust include:

• Avoids probate in California, saving time and costs.
• Provides flexibility to adapt to life changes.
• Maintains privacy compared to a will.

Limitations:

• Does not provide significant protection from creditors.
• Assets are still considered part of your estate for tax purposes.

What Is an Irrevocable Trust?

An irrevocable trust cannot be changed or revoked once it is established, except under limited circumstances. By giving up control, the creator can secure advantages that are not available with a revocable trust.

Benefits of an irrevocable trust include:

• Stronger protection from creditors and lawsuits.
• Potential estate and gift tax advantages.
• Helps preserve assets for future generations.

Limitations:

• Very little flexibility once created.
• The creator cannot easily access assets once transferred.

Which Trust Is Right for You?

The choice between a revocable and irrevocable trust depends on your circumstances. If you want flexibility and control while ensuring your family avoids probate, a revocable trust may be best. If you are concerned about asset protection, long-term tax benefits, or preserving wealth for beneficiaries, an irrevocable trust may be the better option.

At All Day Law, APC, we can provide legal assistance to the California public in determining which trust best fits your estate planning needs.