Revocable Trusts: The Most Common Trusts in Estate Planning
Revocable trusts allow the trust maker complete control over the assets and can be quite efficient when it comes to capital gains and income taxes.


Editor’s note: This is part three of an ongoing series about using trusts and LLCs in estate planning, asset protection and tax planning. The effectiveness of these powerful tools — especially for asset protection and tax planning — depends very much on how they are configured to work together and whether certain types of control over assets and property are surrendered by the property owner. Part one is To Avoid Probate, Use Trusts for Estate Planning. Part two is How Quitclaim Deeds Can Cause Estate Planning Catastrophes.
Revocable trusts are much more common than irrevocable trusts because they provide many important estate planning benefits.
Revocable trusts are more flexible than irrevocable trusts — the revocable trust maker can change the revocable trust at any time, or transfer the property out of the revocable trust at any time without getting permission from anyone. Additionally, revocable trusts will typically have no impact on the trust maker’s income taxes, which is usually desirable, and the trust maker will continue to claim the income taxes from the trust on their individual return, which is usually less costly.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Trust makers form and transfer assets into revocable trusts most commonly because revocable trusts can:
- Avoid probate
- Allow for a step-up in basis on assets to reduce or eliminate capital gains taxes
- Allow both of the revocable trust makers to use their combined exemptions from estate tax
- Provide instructions for the disposition of assets
- Be structured to protect assets for the trust maker’s beneficiaries after the trust maker dies
There are some limitations
Even though revocable trusts provide powerful estate planning benefits, revocable trusts have some limitations. Only an irrevocable trust can protect assets for the trust maker themself. As an example of how a revocable trust would fail to protect assets following a catastrophic lawsuit, imagine this scenario:
Example. The trust maker sets up a revocable trust and later loses a lawsuit, resulting in the lawsuit winner (the judgment creditor) trying to recover against the trust maker’s assets. The revocable trust maker claims that they had protected their property by placing it in the revocable trust, so the judge demands to review a copy of the trust. The trust maker would be forced to turn over the revocable trust for review by the judge and the judgment creditor. If the trust maker were to refuse to comply with the order, they could be thrown in jail for contempt of court. Once the judge and the judgment creditor read the revocable trust and see that the trust maker has control and rights to revoke the trust or remove the property from the trust, the trust maker will be forced by the judge to turn the revocable trust property over to the judgment creditor — or again face contempt of court.
The less common irrevocable trust is not only used for estate and succession planning, much like the revocable trust, but the irrevocable trust can also provide asset protection and estate tax or other transfer tax planning benefits.
However, the advantages of irrevocable trusts to provide these powerful asset protection and estate tax planning advantages come with a tradeoff of giving up control over the trust and trust assets by the trust maker. Giving up that control can be a very challenging decision for a would-be trust maker of an irrevocable trust.
No asset protection with revocable trusts
On the other hand, revocable trusts provide maximum control to the trust maker, but they provide no asset protection and less tax planning potential than irrevocable trusts, although revocable trusts can be quite income tax and capital gains tax efficient.
While a revocable trust can be an excellent tool to plan for estates and avoid basic tax planning mistakes for people who have modest net worth, only an irrevocable trust will also protect assets and potentially shield them from taxes. In other words, a revocable trust will do nothing to protect assets for the trust maker, although the revocable trust can protect assets for the trust maker’s successor beneficiaries. But a revocable trust maker is not protected from creditors by a revocable trust.
So which trust should you set up, revocable or irrevocable?
Both revocable and irrevocable trusts should be utilized. Most people set up both revocable and irrevocable trusts so that they can get the unique advantages of both types of trusts. Everyone who forms an irrevocable trust should also form a revocable trust.
By using both revocable and irrevocable trusts, a person can achieve some of the advantages of both types of trusts. This is why trust makers almost universally form both revocable trusts and irrevocable trusts to work together in a comprehensive estate plan.
My next article will explain how irrevocable trusts can provide asset protection against personal liability.
Related Content
- What Assets Should You Put (or Not Put) in Your Trust?
- Estate Planning: Who Needs a Trust and Who Doesn’t?
- Eight Types of Trusts for Owners of High-Net-Worth Estates
- Four Reasons Retirees Need a (Revocable) Trust
- Four Reasons You Don’t Need a (Revocable) Trust
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Rustin Diehl advises clients on tax, business and estate planning matters. Rustin serves as an adjunct professor, frequent speaker and is current or former chair of professional associations. Rustin is a prolific author and has published many technical and popular articles on estate and business issues, as well as drafting and advising legislators in developing numerous statutes pertaining to trust and estate and business planning, creditor exemption planning and digital asset (blockchain) trusts and blockchain entities known as decentralized autonomous organizations.
-
Stock Market Winners and Losers of the 'Big, Beautiful' Bill
Defense, manufacturing and tech should prosper, while health care and green energy stocks face hurdles.
-
I'm 68 and health issues forced me to retire. Should I claim Social Security or use my savings until I'm 70?
We asked financial planning experts for advice.
-
I'm a Financial Planner: Here's How to Invest Like the Wealthy, Even if You Don't Have Millions
Private market investments, once exclusive to the ultra-wealthy and institutions, have become more accessible to individual investors, thanks to regulatory changes and new investment structures.
-
Four Ways a Massive Emergency Fund Can Hurt You More Than It Helps
Saving too much could mean you're missing opportunities to put your money to work. Redirect some of that money toward paying off debt, building retirement funds, fulfilling a dream or investing in higher-growth options.
-
I'm a Financial Planner: How to Dodge a Retirement Danger You May Not Have Heard About
Timing is everything, and sequence of returns risk can mean the difference between a retirement nest egg that's overflowing … or empty.
-
Caring for Aging Parents: An Expert Guide to Easing the Financial and Emotional Strain
Early conversations, financial planning and understanding the progression of care needs can help to mitigate stress and protect family relationships.
-
I'm a Financial Adviser: The OBBB Is a Reminder for Older People to Have a Long-Term Plan
The new tax bill presents a good opportunity for retirees to revisit tax plans, look into doing some Roth conversions and consider plans for long-term care.
-
I'm an Insurance Expert: This Is Exactly Why Your Insurance Rates Are Soaring (and What You Can Do)
A dramatic rise in the frequency and cost of severe weather and wildfires means you need to prepare, prepare, prepare — no matter where you live — for higher premiums.
-
Q3 2025 Post-Mortem From an Investment Adviser: Markets Continue to Climb, Gold Shines
The third quarter saw market gains driven by Fed rate cuts and strong earnings, despite high valuations and concerns about speculative trading and job growth. Gold and international stocks could be potential hedges.
-
Moving Abroad? You Might Need a Cross-Border Financial Adviser
If you want to live in another country long term, you could benefit from an expert's guidance. Here's how to find a good qualified adviser to help with residency requirements, documentation, financial laws and tax impacts.