Ever wonder what the pros and cons of a revocable trust vs. an irrevocable trust?  People who are worried about getting sued or have enough assets to trigger the federal estate tax find that an irrevocable trust can be a useful tool.  Assets inside an irrevocable trust are protected from creditors, and the assets are not considered part of the estate for purposes of calculating federal estate tax liability.  In 2013, the first $5.25 million of each individual's estate is exempt from estate tax.  (Going forward, that threshold will be indexed to inflation.) 

If your estate isn't near that limit, I think it's important to understand what you give up if you place assets inside an irrevocable trust:  control of that money.  That's what the "irrevocable" is all about.

With a revocable living trust you maintain complete control and flexibility.  While you are alive, assets you have put inside your trust remain 100 percent yours to use as you please.  You can also make changes to your trust as often as you want, altering beneficiaries or changing the terms of how you want your assets handled once you pass.

Creating a revocable living trust with an incapacity clause will allow someone you designate to step in and handle your financial affairs if at some point you can no longer make those decisions for yourself.  And when you die, your heirs will not have to deal with probate.  Wills are required to be approved by a probate judge; with a revocable trust your estate is disbursed exactly as you have laid out in the legal document.  No need for your heirs to get court approval.

The bottom line is that both types of trusts are very different, and one doesn't exclude the other.  Get yourself a good estate lawyer and check them out for yourself.