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

When planning your estate in North Carolina, trusts can be an effective way to protect your assets, provide for loved ones, and avoid probate. Two of the most common options are revocable trusts and irrevocable trusts. While they share the same general purpose—managing and distributing assets—they differ significantly in flexibility, control, and legal protections. Understanding these differences can help you decide which trust fits your goals.

What Is a Revocable Trust?

A revocable trust, often called a “living trust,” allows you to retain full control over your assets during your lifetime. You can change, amend, or revoke the trust at any time. This flexibility is a major advantage if your financial situation, family needs, or goals change.

Benefits of a revocable trust include:

• Avoiding probate for faster distribution of assets
• Maintaining privacy, since trusts are not public record like wills
• Flexibility to update terms as life circumstances change

Limitations:

• Offers no asset protection from creditors or lawsuits
• Assets in the trust are still considered part of your estate for tax purposes

What Is an Irrevocable Trust?

Unlike revocable trusts, irrevocable trusts generally cannot be changed once established. By transferring assets into this type of trust, you give up ownership and control over them. While this may sound restrictive, irrevocable trusts can provide significant advantages.

Benefits of an irrevocable trust include:

• Protecting assets from creditors and legal judgments
• Potential estate tax benefits by removing assets from your taxable estate
• Preserving eligibility for certain government benefits, such as Medicaid

Limitations:

• Loss of control over trust assets
• Difficult to amend once created

Which Trust Is Right for You?

The decision between a revocable and irrevocable trust depends on your priorities. If you want flexibility and control, a revocable trust may be best. If your goal is asset protection, tax advantages, or long-term planning for nursing home care, an irrevocable trust may be the right choice.

At The Stiltner Law Firm, PLLC, we can provide legal assistance to the Hickory public in evaluating your estate planning needs. Every family’s situation is unique, and choosing the right trust structure can make a lasting difference for your loved ones.