This is a fantastic question, because the differences are important, with each having their own advantages and disadvantages. Also, it’s very important to note that neither one is “One Size Fits All” (what’s best for you and your situation can be more easily figured out by meeting with an Estate Planning Attorney).
Basically, a Revocable Living Trust is a trust that you put your assets into, while retaining control over them. In the process of creating a Revocable Living Trust, you set up a successor trustee to take over when you become disabled or die so as to ensure care for you and your family are carried out the way you want. One great advantage of a Revocable Living Trust is being able to avoid probate because the money is no longer in your name i.e. the money is no longer part of your estate. The downside is that you still must pay taxes on your money and you are at risk of being sued.
An Irrevocable Living Trust is different because you no longer have control of the assets you put into the trust. The good thing about doing this (assuming it is done correctly, the Trust is drafted properly, and all subsequent administrative formalities are followed) is you may not have to pay income taxes on the money that grows in trust (although you may choose to with certain strategies), you have much greater protection against lawsuits, and the assets placed in the trust are not subject to estate tax when you die. This is also good because you may be able to use this to increase the size of your estate and provide income tax-free distributions to the ones you love when you pass away.
Obviously, those are the basic differences, and reading this post alone shouldn’t be the deciding factor for you choosing between these two options. However, I would be more than happy to discuss with you what’s best for you and your situation, so just call us and we can begin planning for you today!