The Role of a Revocable vs. Irrevocable Trust in Asset Protection in Illinois

 Posted on August 18, 2025 in Estate Planning

When planning your estate, trusts are one of the most effective ways to protect your assets. Revocable and irrevocable trusts can help protect your money, care for your loved ones, and make sure your wishes are honored. Choosing the right type of trust takes careful thought because each one has its own benefits and drawbacks. A Chatham, IL estate planning attorney can guide you through these choices and help you create a plan that provides lasting security.

What Is the Difference Between a Revocable and an Irrevocable Trust in Illinois?

A revocable trust, also called a living trust, allows you to maintain control over your assets during your lifetime. Under this arrangement, you can add or remove property, change beneficiaries, or dissolve the trust entirely. The Illinois Trust Code, under 760 ILCS 3, explains how trusts are set up, managed, and followed. Because you can amend a revocable trust at any time, the assets inside remain part of your estate.

An irrevocable trust, on the other hand, is much more restrictive. Once property is transferred into it, you cannot change the terms without the consent of the beneficiaries or the court. Even though giving up ownership can feel restrictive, irrevocable trusts offer stronger protection from lawsuits and creditors.

Does a Revocable Trust Work for Asset Protection in Illinois?

Although revocable trusts are extremely useful in estate planning, they do not provide true asset protection. Because the person who creates the trust retains control, the property is still legally considered part of that person’s estate. Creditors can reach into the trust to satisfy debts, and assets can be considered in divorce proceedings or other legal disputes.

For example, under the Illinois Uniform Fraudulent Transfer Act, 740 ILCS 160, creditors may pursue assets transferred into a revocable trust if they believe the transfer was made to avoid paying debts. While revocable trusts offer important advantages, like protection from probate, and allow for a smooth transfer of assets after death, they should not be relied upon as a primary asset protection strategy.

What Are the Asset Protection Advantages of Irrevocable Trusts in Illinois?

Irrevocable trusts provide significantly stronger asset protection because ownership of the assets is transferred out of your estate. Since you no longer legally control the property, creditors generally cannot access it. This feature makes irrevocable trusts especially valuable for individuals with high liability risks, such as business owners, medical professionals, or those concerned about future nursing home costs.

For example, a business owner who is concerned about facing lawsuits could use an irrevocable trust to keep investment properties safe from creditors. Since the owner no longer controls those assets, they are harder to claim. However, once assets are placed in an irrevocable trust, they are not easy to take back. A skilled estate planning attorney can help set up the trust so it fits your long-term goals and follows Illinois law.

Contact a Chatham, IL Asset Protection Attorney for a Free Consultation

Protecting your assets is about more than simply transferring property. It is about making sure your wealth is preserved against future risks, whether from creditors, lawsuits, or the high costs of long-term care. The right legal strategy can shield what you have worked hard to build while still providing for your loved ones.

Attorney Constance R. Sherrod at The Sherrod Law Firm, Ltd. is deeply committed to her community and passionate about working with seniors. She regularly shares her knowledge through community seminars, ensuring families understand how to safeguard their financial futures. To learn how you can strengthen your asset protection plan, call 312-321-6910 to speak with an Englewood, IL estate planning lawyer who cares. Your initial consultation is free.