Revocable vs Irrevocable Living Trusts in Arizona

Both are tools to pass assets outside probate. The big differences are control, creditor exposure and tax results. Here's how to choose with confidence.

Revocable vs Irrevocable at a Glance

• Revocable: You keep control. You can change terms, swap assets, or revoke the trust during your lifetime. See A.R.S. § 14-10602.
• Irrevocable: You give up control to lock in protection or tax benefits. Changes usually require consent from others or the court.
• Probate: Both can avoid probate if you fund them correctly. Learn how in our step-by-step funding guide.

Control and flexibility

Revocable trusts are easy to adjust, irrevocable trusts are designed to stay put.

With a revocable living trust, you can amend or revoke any time while you have capacity. Arizona law makes trusts revocable unless the document says otherwise. See A.R.S. § 14-10602.

Irrevocable trusts limit your ability to make changes. That trade-off can serve goals like asset protection or gifting, but it means less day-to-day control.

New to trusts? Start with our plain-English overview: Living Trusts Explained, and compare structures in Trusts vs Wills.

Creditor exposure and protection

Revocable trust assets remain reachable by your creditors, irrevocable trust assets may be shielded if properly structured.

During your lifetime, anything in a revocable trust is still treated as yours for creditor purposes. Arizona's statute says a settlor's creditors can reach revocable trust property. See A.R.S. § 14-10505(A)(1).

Irrevocable trusts can offer protection if you do not keep powers that undermine the shield. Timing matters, and fraudulent transfer rules still apply. This is where tailored legal advice helps.

Taxes and the step-up in basis

Revocable trust assets typically receive a step-up in basis at death, irrevocable trust assets may not.

Revocable trusts are usually included in your taxable estate, so assets generally receive a basis step-up at death. That can reduce capital gains for heirs.

For irrevocable trusts, the outcome depends on whether assets are included in your estate. The IRS clarified there is no step-up when assets are not includible, even if the trust is a "grantor trust" for income taxes. See IRS Rev. Rul. 2023-2.

Probate and privacy

Either trust can avoid probate if funded, which keeps your affairs private and your timeline faster.

Court processes are public and slow. A funded trust lets your successor trustee act without opening a probate case, then settle and distribute in private.

Arizona institutions often accept a short "Certification of Trust" as proof of authority, which helps you handle accounts without sharing the full document. Pair this with proper titling and beneficiary designations to keep things simple.

Need a refresher on probate itself? Visit our Guide to Probate.

When an irrevocable trust can be the right tool

Use it for specific goals, not as a default.

• Asset protection from future personal creditors, when structured and timed correctly.
• Gifting and estate-tax planning for larger estates and legacy goals.
• Special needs planning to preserve benefits for a loved one.
• Long-term care strategies in carefully planned cases. Rules are strict, timing is critical.

Most Arizona families start with a revocable trust for flexibility, then consider a narrow irrevocable trust for a specific objective.

Funding: the step people skip

The trust only works on assets it owns or receives by beneficiary.

• Retitle real estate and key accounts to the trust, or use beneficiary designations where appropriate.
• Do not retitle retirement accounts to the trust. Consider naming the trust as beneficiary when you need controls.
• Keep a simple property list for household items and collectibles.

Walk through it with our funding checklist. If you are comparing options, review Living Trusts Explained and Powers of Attorney for incapacity planning.

Bottom line

Choose revocable for control and simplicity, choose irrevocable only when a clear goal justifies the trade-offs.

Match the tool to your goal. If you want easy updates and probate avoidance, revocable fits. If you need targeted protection or gifting, consider a narrow irrevocable trust and get advice before you move assets.

This article is educational and not legal advice. For personal guidance, speak with a licensed Arizona attorney or our team can connect you.