Simply stated an irrevocable trust is a trust that cannot be modified except by a court order. By contrast a living revocable trust — like a Will — can be modified at any time prior to the Grantor's death.
So which is better? To give you a lawyer-like answer, it depends. At one time living revocable trusts were used by married couples to avoid the federal estate tax. However, now that the federal estate tax exemption is $5,250,000 per person, the most common use of living revocable trusts is to avoid probate. Other uses include providing for the management of funds left to minor heirs or incapacitated heirs; controlling the distribution of funds to adult children who are poor money managers; and attaching conditions on the distribution of funds to the heirs. In short, a living revocable trust enables the Grantor to literally "rule from the grave."
A classic example of "ruling from the grave" is the living revocable trust that I drafted for a wealthy client whose son has an ongoing drug problem. The trust provides that the son is to receive income for life from the trust after my client's death, but only if he completes a drug rehabilitation program and passes a drug test quarterly. Upon the son's death (or if he fails a drug test) the trust will be equally divided among my client's grandchildren.
An irrevocable trust typically takes effect during the Grantor's lifetime and distributes funds to the Grantor's beneficiaries while the Grantor is still alive. It differs from a revocable living trust in that it can be modified or revoked only by court order, and generally speaking it is not subject to the claims of the Grantor's creditors. Thus, an irrevocable trust can be a useful estate planning tool for professionals and wealthy individuals who are at a high risk from lawsuits. Other advantages of an irrevocable trust include reduction of the Grantor's income tax liability as well as reduction of the size of his or her estate for estate tax planning purposes.
So which is better? As I stated, it depends, but the starting point is a consultation with an experienced and knowledgeable estate planning attorney who can assist you in assessing your options and developing (and implementing) a plan that will enable you to achieve your objectives.