When you think of the term trust, you may thing that all trusts are created equally.  However, there are many kinds of trust and some may be better for your situation than others.  Depending on your circumstances, an irrevocable trust may be beneficial to you.  Here are some considerations regarding an irrevocable trust:

What is an Irrevocable Trust?

A trust is a legal device which permits the trust creator or “grantor” to move assets into a type of separate legal ownership which will be managed by a trustee for the benefit of designated beneficiaries.  This trustee rather than the grantor will have legal title to the trust properties and is responsible for safeguarding and managing them.  As the name implies, an irrevocable trust is a kind of trust which cannot be altered after it is created.  This means that after the grantor transfers property into the trust, he or she cannot take that same property back for their own benefit.  Generally, the grantor will also not be allowed to change the trust terms. However, in some situations, the grantor may be allowed to receive income from the trust. 

Benefits of an Irrevocable Trust

Irrevocable trusts can be formidable asset protection and estate planning tools when you are preparing for long-term care.  For instance, if you intend to use Medicaid to pay for long-term care costs, placing assets into an irrevocable trust at the right time will mean that they will not countable in terms of qualifying for Medicaid’s long-term care benefits.  Another benefit to using an irrevocable trust is that the trust assets will usually not be subject to seizure by your creditors.   Further, because you no longer own the trust property, it does not contribute to the gross value of your estate for estate tax purposes.  If you have a large estate this can be highly beneficial. Additionally, unlike assets bequeathed through a will, placing them into this trust means that you can add specific rules and requirements regarding how the beneficiaries can use their distributions.  For instance, you could limit a beneficiary’s use of trust income to pay for their educational expenses. 

Determining how the potential benefits from an irrevocable trust may apply to your circumstances can be complicated.  Further, you will need to select the right kind of irrevocable trust and ensure it is created in a manner which meets your needs and those of your intended beneficiaries.   We have experience helping clients examine trust and other estate planning options in order to evaluate which devices are best for their circumstances.  Contact us online or by phone if we may be of assistance.