Answer by Jim Bedsole:
One can be revoked and the other cannot. Sorry, I couldn't resist.
Answer by Ken Golliher:
I am basically going to say what Jim said, but with a lot more words. (That happens here occasionally.)Both the IRS and the FDIC use the term "revocable trust" in reference to a bank account which is not supported by a written agreement, but has POD provisions under state law. This revocable trust does not require documentation, only titling in accordance with state law. The party who established the account can close it or remove the POD beneficiary at any time.
The term is also routinely used to describe a very different legal relationship where there is a written trust agreement. A trust of this type is often referred to as a trust under agreement, grantor trust or living trust. Like the simple bank account described above, it is revocable. Any of those who established it can change their minds and revoke it.
An irrevocable trust is a written document where, by its own terms, it cannot be altered after it is established. The trustee must follow the instructions in the trust, not those of the people who wrote and funded the trust; those who established the trust no longer control the funds. The law treats it as a separate "person;" it has its own EIN and files its own income tax return. Irrevocable trusts are routinely used to reduce federal estate taxes by removing a surviving spouse's control over the assets, but also have other purposes.
First published on BankersOnline.com 4/01/02