Clear Money Guide
What this guide covers
A quick view of the questions and evidence developed below.
Comparison tables scroll horizontally on smaller screens.
Updated August 1, 2026. Quick answer: the honest comparison is not “which trust is better” — it is what you are willing to give up. A revocable trust gives up almost nothing and protects against almost nothing: you keep control, the assets stay in your taxable estate, and your heirs keep the step-up in basis. An irrevocable trust can put the house beyond your reach and beyond some creditors’, and the price is control plus, if the assets leave your estate, the step-up — which Rev. Rul. 2023-2 confirmed is genuinely lost.
What each one actually costs you
| Question | Revocable | Irrevocable (assets out of your estate) |
|---|---|---|
| Can you change your mind? | Yes, any time | Not unilaterally |
| Do your heirs get a step-up in basis? | Yes | No — Rev. Rul. 2023-2 |
| Is it in your taxable estate? | Yes | No, by design |
| Does it avoid probate? | Yes | Yes |
| Does it protect from creditors or long-term-care costs? | No | Potentially — the usual reason to do it |
The row people miss is the second one, and it is the expensive one. Put a house bought for $150,000 and worth $650,000 into an irrevocable trust that removes it from your estate, and your heirs inherit the $150,000 basis. Sell at $650,000 and roughly $500,000 of gain is taxable. Had the house stayed in your estate, that same sale would have produced close to nothing. Compute it for your own numbers.
If the revocable side is where you land
The fork on this page is estate inclusion, not the word revocable — and the irrevocable side is attorney work by nature. If your answer is the revocable trust, that is a document a guided form can produce: LawDepot builds a state-specific revocable living trust, with the retitling still to do afterwards.
See the revocable living trust
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Why “grantor trust” does not rescue this
An irrevocable trust is often drafted as a grantor trust, so the grantor keeps paying income tax on it. That is deliberate and usually sensible. It does not keep the step-up. Rev. Rul. 2023-2 addresses exactly this arrangement — owner for income-tax purposes under chapter 1, assets outside the gross estate under chapter 11 — and holds there is no §1014 adjustment. Two different chapters, two different questions.
The version that keeps both, and what it costs
An irrevocable trust can be drafted so the assets stay includible in your gross estate. Then the step-up survives, because the ruling’s central condition is not met. What you give up is the protection that depended on the assets being out of your estate. This is the real fork, and it is why the useful question for a drafting attorney is “are the assets includible in my gross estate?” rather than anything about revocability.
If long-term care is the driver, read whether Medicaid can take your house first — the lookback and what a trust actually protects are covered there, and they change the timing. On costs and mechanics: what a living trust costs, will versus trust, and if a house is the only reason you are considering a trust, a transfer-on-death deed may do the probate job for a fraction of the cost — and keeps the step-up, because the property stays yours until death.