The major advantages of a revocable living trust include flexibility, privacy, avoiding probate and the ability to plan for eventual disability, reports About.com. Irrevocable living trusts protect assets from estate taxes and creditors.
Revocable and irrevocable trusts are set up during the lifetime of the trust's creator, says CNN Money. The creator of a revocable trust can dissolve the trust or change its terms at any time, including the trustees, beneficiaries and assets, according to AARP. Revocable living trusts avoid the time and expense of probate. Additionally, probate proceedings are public court records, but living trusts are private documents. Revocable living trusts also help their creators plan for mental disability by turning over management of the trust to a disability trustee whom the creator of the trust chooses instead of a court-appointed guardian, as reported by About.com.
Because the assets in an irrevocable living trust belong to the trust and not its creator, they are protected from creditors and saved for the beneficiaries of the trust, states About.com. Federal and state governments do not consider irrevocable trusts part of an estate, so the assets pass directly to the beneficiaries without payment of estate taxes. Several types of irrevocable trusts address the specific needs and situations of the creators, according to CNN Money. Credit shelter or bypass trusts pass assets directly to spouses without taxes, generation-skipping trusts save assets for grandchildren or later descendants, and life insurance trusts pass funds from life insurance policies on to beneficiaries without taxes.