What is a Revocable Trust? | IRS Definition of a Trust


A revocable trust is a trust that is created under an agreement that can be changed. When opening the trust, a grantor (or grantors) will place assets in the trust for the benefits of a beneficiary. The trust will pay out under terms that the grantor has stated and the beneficiary only has the amount of control over the trust that the grantor grants. At any time, the trust can be dissolved by the grantor, and access to the trust can be revoked. This is what makes the trust “revocable.” In other aspects, the trust is still under the grantor, and often files taxes under the grantor’s SSN.
Revocable trusts are often used as a form of wealth management, wherein high net worth individuals can give children or grandchildren access to funds without giving them control over the assets directly. Being able to revoke the trust is the primary advantage. Because the trust is revocable it will not need an EIN until it becomes irrevocable, which happens if the trust isn’t dissolved upon the grantor’s death.