Top 4 Differences between Living Trust vs Irrevocable Trust that helps you pick the right one

Living Trust vs Irrevocable Trust

When people talk about estate planning, “Trust” is often mentioned. If you are interested in your estate planning or trying to understand why a Trust is imperative to avoid the hassles and expense of Probate, then this article may be for you. Read on if you own property or have assets that you want to pass on.  

Understanding the power of a Trust and choosing the right one may save your estate 2-4% of its value, and equally important, spare your heirs’ lots of heartache and, on average, a year hassling with the probate court system.  

Do people aware of Revocable vs Irrevocable Living Trusts in California?

After your death, Living Trust assets pass to family and friends you have chosen as your beneficiaries. Living trusts are gaining popularity as an estate planning tool. Surprisingly only about 5% of the population takes advantage of them. Up-front costs of a Trust ranging from $250-$2500 may contribute to the low participation rates. I suspect a general lack of information keeps more folks from taking advantage of the Trust as an asset protection mechanism. Additionally, no one wants to think about their demise, let alone plan for their death or incapacity.  

Do you know someone who has a Trust?

Unfortunately, both my parents passed away these past two years each had Cancer. Thankfully my folks had a Living Trust in place. It would have been challenging for me to settle their affairs in Alaska, and I was down in California. It’s difficult enough dealing with such a loss, one after another. Can you imagine having to fly back and forth to Probate their estate? Thankfully they had a trust in place that protected their hard-earned assets. As the named executor, my fiduciary duties- paying taxes, paying off all debts, selling the family home, and then finally distributing half of the proceeds from the estate to my brother and closing all the savings, checking, and savings accounts were not easy but made easier by the Trust.

What is a Trust?

A trust is a separate juridical entity that a person will set up to manage all personal assets and real estate. As contemplated by law, trusts are set up during a person’s lifetime so that his assets are collected and used in a way that is deemed appropriate. All assets, real property, and investments are placed inside the Trust. A third party is then named to manage the assets in a predefined way. This third party who will manage the Trust is called the trustee. The trustee determines how assets are invested and distributed when the Trustor dies according to their wishes. The trustee must manage the trusteeship under the provisions laid out by the Trust.

Living Trust vs. Irrevocable Trust

By discussing the differences between living trust vs. irrevocable Trust, you will better understand how a trust as a part of your estate planning could benefit all the parties involved in the Trust, including your loved ones and your estate after you have passed away. The main difference is that a Living Trust is changeable, whereas an Irrevocable Trust is not. Below are four differences between a Living Trust and an Irrevocable trust.

Trust: 4 Differences between Living Trust vs. Irrevocable Trust

Modifying the Trust

The first main difference between a Living Trust vs. Irrevocable Trust is the Trust can be modified AFTER it is created and duly executed. There is no trust until the instrument is constructed and duly executed by the Trustor. Specialists in Estate Planning, Trust specialists attornies draft the trust documents. The Trustor then reviews and signs the papers, witnessed, and notarizes them to become effective. Notarization is the process of making a private instrument into a public instrument. A trust document is executed when notarized by estate planning lawyers.

With a living trust, or sometimes referred to as a Revocable Trust, a person usually has the legal capacity to alter, change, modify or revoke the Trust at a LATER DATE. Therefore, in living trusts, the Trustor can change their mind at any time, whether they want to keep the Trust, modify or alter it, or revoke the Trust. 

Conversely, an irrevocable trust is more concrete once it has been signed, witnessed, and notarized. The language of an irrevocable trust will indicate that the same cannot be modified, altered, or revoked once it becomes effective. 

Ownership of Property

The second difference between a Living Trust vs. an Irrevocable Trust has to do with ownership of the property within the Trust. When an irrevocable trust is created, real properties such as land and homes and personal properties such as vehicles are transferred into the Trust. As a separate juridical entity, the Trust becomes the owner of such property. The person who previously owned those assets does not have ownership interest or control over the properties outside the Trust. 

Once it has been executed and funded, an irrevocable trust cannot be changed by an individual who created the Trust.

In a Living Trust, however, the individual who created the Trust still has ownership over his property or, at the very least, control over the assets, and that includes the power to revoke said Trust. Living Trusts are revocable, and ownership therein can be changed at any time.

Protection of Assets

The third difference between a Living Trust vs. Irrevocable Trust is the protection of assets. The safety of assets in irrevocable trusts are better than living Trust. Living Trusts are revocable, and the individual who created the Trust retains control over the trust assets. This control includes transferring the property out of the Trust back to the individual who created it as needed. As a result, revocable Trust or living trust is usually not protected from creditors. 

When an irrevocable trust is created and property, real or personal, is placed into it, the individual’s creditors cannot attach or execute against the property set within the Trust. It is protected under the language of the irrevocable trust document.

Federal Estate Taxes

The fourth difference is that Living Trust vs. Irrevocable Trust has everything to do with federal taxes. One of the inherent characteristics of a living trust is revocable or changeable. Because a living trust can be modified or altered, it cannot be used to avoid paying the federal estate tax of an estate. However, an irrevocable trust can be used for this purpose.


In summary, when creating a Living Trust, you transfer ownership of your assets to the Trust you manage as the trustee. The assets pass to your designated beneficiaries when you die. If you become incapacitated or no longer want or can manage your Trust, your named successor trustee can take over. The management and distribution of the assets in the Trust will follow your wishes upon your death. You may opt for an Irrevocable Trust over (Revocable) Living Trust for asset and liability protection.  

I am a California Realtor, working primarily in San Diego and Orange Counties, specializing in Trust and Probate cases. Though I’m not a lawyer or a tax accountant, I’m a Realtor. Every Tuesday, I go down to the Courthouse to review all the new Probate cases and reach out to Executors and Administrators of cases who will eventually need to sell the Real Estate and make ready for distribution of the proceeds to pay the heirs.  

What happens when you don’t have a living trust?

Fully 95% of estates will get mired in Probate Court. Probate court is entirely avoidable if you correctly set up a Trust to protect and direct real and personal property if you die or are incapacitated.  

The role of the probate court is to discover and validate any Will that exists. The Court is there to facilitate taxes of the deceased are paid. Those debts are settled, assets liquidated, and distributed. Probate is used to describe the entire court process, including the reading of the will if any exists. A summary of taxes and liabilities as well as an inventory of assets, then the sale of such assets is completed. The final step in Probate is the settlement process which is the distribution of all assets to said heirs or distributed by succession guidelines in accordance with the law.

Probate is a time-consuming and costly process. On average, it takes one year to Probate and estate and typically, the fees and court costs add up to between 2-4% of the total value of the estate. It is common in California to see $50,000 in costs to Probate a 1 million dollar estate. 

I work closely with trust specialist attornies, though I am not an attorney or an accountant. Instead, I’m Realtor. I help sellers in the Probate Courts with the sale of Real Property, namely house and land, typically the most valuable asset of any Estate, once they are permissioned to sell the Real Estate. 

The sale of the home is just one of many responsibilities the Executor or Administrator of a Probate has to handle. I work closely with professional Trust Attornies and Tax Accountants that can help.  

Examples of California Counties we serve: San Diego, Orange, Los Angeles, Fresno, San Bernardino, Kern, Alpine, Alameda, Del Norte, Amador, Butte, Calaveras, Colusa, Contra Costa, El Dorado, Fresno, Glenn, Humboldt, Imperial, Inyo, Kings, Lake, Lassen, Madera, Marin, Mariposa, Mendocino, Merced, Modoc, Mono, Monterey, Napa, Nevada, Placer, Plumas, Riverside, Sacramento, San Benito, San Francisco, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Shasta, Sierra, Siskiyou, Solano, Sonoma, Stanislaus, Sutter, Tehama, Trinity, Tulare, Tuolumne, Ventura, Yolo County and Yuba County.

If you would like to protect your assets and heirs from delays, court costs, and fees, and all the headaches and heartaches of Probate Court, you are in the right place. Give me a call today to discuss your options. I’m Kevin McClenahan – a Realtor, and I’m here to help with no strings attached. Call me at 858.284.7778 from 9-5 Mon-Fri. After hours email me at, and I’ll put you in touch with the professional that best suits your needs.

One comment

  1. Good afternoon Kevin, I live in Texas and not California. Any recommendations on who to connect with in Texas, particularly in Houston?



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