An irrevocable trust can’t be modified or terminated except under certain very limited circumstances. This type of trust requires the grantor (the person for whom the trust is created) to transfer assets into the trust and give up his or her rights of ownership to those assets. So why would anyone want an irrevocable trust, as opposed to a more flexible revocable trust?
Irrevocable trusts, when properly designed and implemented, can provide exceptional asset protection from the high cost of long-term care… a level of protection revocable trusts simply cannot match. That’s because assets in a revocable trust are available to the grantor. MassHealth will determine that those assets have to be used to pay for long-term care. This is not the case with an irrevocable trust, as long as it is designed and implemented in accordance with the latest laws governing MassHealth eligibility.
An irrevocable trust protects assets against other threats as well, including creditors and lawsuits. Why? Since assets in the trust are technically not owned by the grantor, they are unavailable to a creditor or the plaintiff in a lawsuit. It is vital to understand, however, that an irrevocable trust must be created before creditors come calling or a lawsuit is initiated.
Finally, it’s worth noting that irrevocable trusts, like revocable trusts, allow your beneficiaries to avoid the delays, frustration, and expenses of Massachusetts probate after you pass away.
So, is an irrevocable trust right for you? As with other aspects of estate planning, it depends on your particular needs and goals. As always, I’m here to answer all of your questions and help you in every way I can.
Until next time, take care…