What is the difference between revocable trust and living trust? Both are legal instruments used to manage and protect assets, but they have distinct characteristics and purposes. Understanding these differences is crucial for individuals considering estate planning or asset management strategies.

A revocable trust, also known as a revocable living trust, allows the grantor to retain control over the assets placed into the trust during their lifetime. The grantor can modify, revoke, or terminate the trust at any time. This type of trust offers flexibility and the ability to manage assets without the need for probate. However, assets held in a revocable trust are still subject to estate taxes and may not provide the same level of asset protection as an irrevocable trust.

On the other hand, a living trust, also known as an irrevocable trust, cannot be modified, revoked, or terminated by the grantor once it is established. The assets transferred into the trust are considered to belong to the trust, not the grantor. This type of trust provides greater asset protection and can help avoid probate, as the assets are already distributed according to the trust’s terms. However, the grantor loses control over the assets and cannot change the trust’s terms without the consent of the trustee or beneficiaries.

In the following sections, we will delve deeper into the key differences between revocable trust and living trust, including their tax implications, asset protection, and estate planning benefits. By understanding these differences, individuals can make informed decisions about their estate planning and asset management strategies.