How an irrevocable trust protects what you own
An irrevocable trust is a separate legal arrangement that, once created, generally can’t be changed or cancelled by the person who made it. When you transfer assets into it, they generally stop belonging to you — and that separation is what can protect them.
Depending on the type of trust and your state, an irrevocable trust can help keep assets out of reach of future creditors and lawsuits, preserve savings during long-term care planning, keep life insurance proceeds out of your taxable estate, and protect an inheritance from a beneficiary’s creditors or divorce.
What you trade for protection
- You generally give up ownership and control of what you transfer.
- The trust generally can’t be changed later, except in limited ways.
- Protection depends on the trust type, your state’s law and timing.
- Transfers made to avoid existing debts or claims can be undone.
Common asset protection goals
Protect against future claims
A properly structured irrevocable trust can place assets beyond the reach of your future creditors. Some states, such as Nevada, South Dakota, Delaware and Alaska, also allow self-settled trusts where you can remain a beneficiary.
Plan for long-term care
A Medicaid asset protection trust can preserve savings and a home for your family. Transfers are subject to Medicaid’s five-year look-back, so timing matters.
Protect your heirs’ inheritance
Spendthrift and discretionary provisions generally keep a beneficiary’s share safe from their creditors, lawsuits and divorces until it is paid out.
Keep life insurance out of your estate
An irrevocable life insurance trust (ILIT) can own your policy so the payout generally isn’t counted in your taxable estate.
Provide for a loved one with special needs
A special needs trust can supplement a beneficiary’s care while being designed with SSI and Medicaid rules in mind.
Pass wealth to future generations
Dynasty and generation-skipping trusts can hold assets for children, grandchildren and beyond, with specialized tax rules.
Our irrevocable trust service Planned
Irrevocable trusts are a core part of what Trust With Us is building. Because each type works differently, each will be offered with its own plain-English questions, documents, and signing and funding instructions — and availability will be shown by state.
- Tell us your goal and state through the inquiry form.
- Answer guided questions built for that type of trust.
- Review your documents before you sign.
- Sign following your state’s requirements.
- Transfer (fund) the assets you want protected, using our step-by-step instructions.
Because irrevocable trusts are hard to undo and often involve tax and benefit rules, consider advice from an independent attorney and tax professional for your situation. Trust With Us is not a law firm and does not provide legal or tax advice.