If you are going to be starting a living trust, it will usually be set up for you as a revocable trust. This allows you to retain the option to alter the terms of the trust as you see fit down the road, and you may even cancel it outright before your assets are distributed, if anything should come up to give you reason to do so.

Having your trust set up this way allows you the most flexibility and gives you a way to respond to changes that may arise in your financial or personal situation. If ever you need immediate access to your funds in the future, or simply find yourself wanting to make slight changes to the original terms, a revocable trust will give you the freedom to do so.

However, there is a downside to all this flexibility. Revocable trusts do not enjoy the same tax benefits as irrevocable trusts do. This is a legal condition that limits the usefulness of revocable trusts as a tax savings measure. Your entire estate is subject to the usual taxes if your assets are held in a revocable trust fund.

If you prefer to maximise the tax savings potential of a trust, your best option is to set up an irrevocable trust. The irrevocability of such an arrangement is enforced by the legal condition that the testamentary trust can only be created after the settlor of the trust has died. Obviously, as the deceased will not be available for any form of comment at this juncture, the possibility of alterations or cancellation of the trust on the settlor's behalf are rendered moot.

Aside from tax benefits, revocable and irrevocable trusts share similar characteristics and advantages for the settlor. Whether you have set up your trust to be revocable or irrevocable, you will enjoy the benefits of control, confidentiality, convenience and the peace of mind that comes from knowing that your beneficiaries will be taken care of financially, according to your wishes, when the time comes.