Revocable vs Irrevocable Trust

In Matthew 25:14-30, Jesus tells the Parable of the Talents, a parable about a man who left his property under the management of his servants. Similarly, today, a person can place his or her property into a trust, an arrangement in which a person enters into a valid agreement, sometimes called a trust agreement, to place his or her assets under the management of another person, making the person who receives those assets a trustee when he or she agrees to hold and manage those assets. These trusts can be revocable or irrevocable. The difference between a revocable trust and an irrevocable trust is how easily a person can get out of the trust.

What is a revocable trust?

In North Carolina, South Carolina, and Indiana, a revocable trust is a trust whose terms do not expressly say that the trust is irrevocable, North Carolina General Assembly, N.C.G.S. § 36C-6-603(b) (https://www.ncleg.gov/enactedlegislation/statutes/html/bysection/chapter_36c/gs_36c-6-603.html); South Carolina Legislative Services Agency, S.C. Code § 62-7-602(a) (https://www.scstatehouse.gov/code/t62c007.php); Indiana General Assembly, IC 30-4-3-1.5(a) (https://iga.in.gov/laws/2025/ic/titles/30/#30-4-3-1.5). Depending on the state, there are four main ways that a settlor can get out of a revocable trust: compliance with the terms of the trust regarding the termination of the trust; a will or codicil; an oral statement, if the trust was created orally; or any other written method that manifests clear and convincing evidence of the settlor’s intent to get out of the trust.

In North Carolina, South Carolina, and Indiana, a settlor can get out of a revocable trust by compliance with a method provided in the terms of the trust, North Carolina General Assembly, N.C.G.S. § 36C-6-602(c)(1) (https://www.ncleg.gov/enactedlegislation/statutes/html/bysection/chapter_36c/gs_36c-6-602.html); South Carolina Legislative Services Agency, S.C. Code § 62-7-602(c)(1) (https://www.scstatehouse.gov/code/t62c007.php); Indiana General Assembly, IC 30-4-3-1.5(c)(1) (https://iga.in.gov/laws/2025/ic/titles/30/#30-4-3-1.5). For settlor to use a will or codicil to get out of a trust in South Carolina and Indiana, after getting the trust, a settlor can execute a will or codicil that both expressly refers to the trust and manifests clear and convincing evidence of the settlor's intent, S.C. Code § 62-7-602(c)(2)(A); IC 30-4-3-1.5(c)(2)(A)-(B). For settlor to use a will or codicil to get out of a trust in North Carolina, after getting the trust, a settlor can get execute a will or codicil that either expressly refers to the trust or specifically devises property that would otherwise have passed according to the terms of the trust, N.C.G.S. § 36C-6-602(c)(2)(a).

North Carolina and South Carolina allow a settlor to get out of an oral trust by oral communication, North Carolina General Assembly, N.C.G.S. § 36C-6-602(c)(2)(b) (https://www.ncleg.gov/enactedlegislation/statutes/html/bysection/chapter_36c/gs_36c-6-602.html); South Carolina Legislative Services Agency, S.C. Code § 62-7-602(c)(2)(B) (https://www.scstatehouse.gov/code/t62c007.php); but Indiana does not, Indiana General Assembly, IC 30-4-3-1.5(c)(1)-(2)(B) (https://iga.in.gov/laws/2025/ic/titles/30/#30-4-3-1.5). In North Carolina and South Carolina, for a settlor to get out of a trust using a writing that manifests clear and convincing evidence of the settlor’s intent, someone must deliver that writing to the trustee, N.C.G.S. § 36C-6-602(c)(2)(c); S.C. Code § 62-7-602(c)(2)(C); but in Indiana, such a writing doesn’t have to be delivered to the trustee for that writing to get the settlor out of a revocable trust, IC 30-4-3-1.5(c)(2)(B).

What is an irrevocable trust?

In North Carolina, South Carolina, and Indiana, an irrevocable trust is a trust whose terms expressly say that the trust is irrevocable, North Carolina General Assembly, N.C.G.S. § 36C-6-603(b) (https://www.ncleg.gov/enactedlegislation/statutes/html/bysection/chapter_36c/gs_36c-6-603.html); South Carolina Legislative Services Agency, S.C. Code § 62-7-602(a) (https://www.scstatehouse.gov/code/t62c007.php); Indiana General Assembly, IC 30-4-3-1.5(a) (https://iga.in.gov/laws/2025/ic/titles/30/#30-4-3-1.5). Irrevocable trusts are much harder to get out of. Depending on the state, there are four main ways that a settlor can get out of an irrevocable trust: the settlor and all beneficiaries of the trust consent, the court concludes either that continuance of the trust is not necessary to achieve any material purpose of the trust, the reason for modifying or terminating the trust under the circumstances substantially outweighs the interest in accomplishing a material purpose of the trust, or if, because of circumstances not anticipated by the settlor, modification or termination will further the purposes of the trust.

In both North Carolina and South Carolina, an irrevocable trust can be revoked, regardless of the total value of the trust property, if the settlor and all of the beneficiaries consent, even if the modification or termination is inconsistent with a material purpose of the trust, North Carolina General Assembly, N.C.G.S. § 36C‑4‑411(a) (https://www.ncleg.gov/EnactedLegislation/Statutes/PDF/BySection/Chapter_36C/GS_36C-4-411.pdf); South Carolina Legislative Services Agency, S.C. Code § 62-7-411(a) (https://www.scstatehouse.gov/code/t62c007.php); but in North Carolina, court approval is not required, N.C.G.S. § 36C‑4‑411(a); while in South Carolina, court approval is required, S.C. Code § 62-7-411(a). If the settlor is deceased, in both North Carolina and South Carolina, an irrevocable trust can be revoked if all of the beneficiaries consent and the court concludes that continuance of the trust is not necessary to achieve any material purpose of the trust, N.C.G.S. § 36C‑4‑411(b); S.C. Code § 62-7-411(b); but North Carolina allows an irrevocable trust to be revoked also if the reason for modifying or terminating the trust under the circumstances substantially outweighs the interest in accomplishing a material purpose of the trust, N.C.G.S. § 36C‑4‑411(c); but South Carolina does not, S.C. Code § 62-7-411(b). If not all of the beneficiaries consent, in North Carolina and South Carolina, an irrevocable trust can still be revoked if the interests of a beneficiary who does not consent will be protected, N.C.G.S. § 36C‑4‑411(d); S.C. Code § 62-7-411(d)(2); and the court concludes that continuance of the trust is not necessary to achieve any material purpose of the trust, N.C.G.S. § 36C‑4‑411(b); S.C. Code § 62-7-411(b); but North Carolina allows an irrevocable trust to be revoked also if the reason for modifying or terminating the trust under the circumstances substantially outweighs the interest in accomplishing a material purpose of the trust, N.C.G.S. § 36C‑4‑411(c)-(d); but South Carolina does not, S.C. Code § 62-7-411(b).

In Indiana, an irrevocable trust can be revoked (1) if the trust both consists of trust property that has a total value of less than seventy-five thousand dollars ($75,000) and the value of the trust property is insufficient to justify the cost of administration, by the trustee, Indiana General Assembly, IC 30-4-3-24.5 (https://iga.in.gov/laws/2025/ic/titles/30/#30-4-3-24.5); or, (2) if the trust consists of trust property that has a total value of seventy-five thousand dollars ($75,000) or more, only by modification by the court if, because of circumstances not anticipated by the settlor, modification or termination will further the purposes of the trust, IC 30-4-3-24.4(a) (https://iga.in.gov/laws/2025/ic/titles/30/#30-4-3-24.4). Neither consent of the beneficiaries, IC 30-4-3-7.5 (https://iga.in.gov/laws/2025/ic/titles/30/#30-4-3-7.5), nor a nonjudicial settlement agreement, IC 30-4-5-25(c) (https://iga.in.gov/laws/2025/ic/titles/30/#30-4-3-25), is sufficient to revoke an irrevocable trust in Indiana.