Irrevocable Trust

A living irrevocable trust is one which cannot be changed or terminated unless the beneficiary of the trust grants permission to do so. Therefore, once the person who establishes the trust, known as the “testator,” the testator gives up all of his or her claim to ownership of the property in the trust.

When to use an Irrevocable Trust

The irrevocable trust is generally used in conjunction with estate planning, Medicaid estate planning and for tax purposes.  The main benefit of the trust is the fact that the assets placed into the irrevocable trust are not included in the assets of the grantor’s taxable estate and thus have no irrevocable trust tax.  When seeking to avoid use of one’s assets for long term care, irrevocable trusts are used in Medicaid estate planning.  Generally, once property has been placed into an irrevocable trust for at least five years, the property may not be touched for long term care expenses and therefore can assist in qualifying an individual for Medicaid for the long term care. There are two types of irrevocable trusts. The first type of irrevocable trust is the living irrevocable trust. This kind of trust is also known as an inter vivos irrevocable trust. The inter vivos trust is funded while the testator is alive.  The second type is a testamentary irrevocable trust, or sometimes known just as a testamentary trust. The testamentary irrevocable trust comes into existence upon the death of the testator and is therefore funded upon the testator’s death.

Modifying Irrevocable Trusts & Legal Help

Trust law states that irrevocable trusts generally cannot be altered.  However, if the beneficiaries allow for a modification, the trust could potentially be changed.  In addition, an irrevocable trust could be changed if the court permitted the revision.  Such a change may occur where there has been a significant change in circumstances.  Not everyone should have an irrevocable trust in his or her estate plan; an experienced estate planning attorney can review your interests and create an appropriate estate plan which may or may not include the irrevocable trust.