Irrevocable Trusts

Trusts are valuable estate planning tools, and the most powerful trusts are irrevocable trusts. You can establish various types of irrevocable trust to accomplish a variety of goals, such as protecting assets from creditors, providing for loved ones, minimizing tax liability, or establishing eligibility for long-term care benefits.

At Jordan & White, we custom tailor trusts to meet your specific objectives. Many people are surprised to learn what we are able to accomplish through a trust. We’d be happy to show you.

How an Irrevocable Trust Functions to Provide Protection

When you transfer assets in an irrevocable trust, you can determine what they will be used for, but you lose direct control over them. They technically no longer belong to you, even if you are the beneficiary of the trust. The property in the trust belongs to the trust.

That means the property does not become part of your estate when you pass away. That decreases estate tax liability. Having the assets out of your ownership also could help you qualify for long-term care benefits through Medicaid/MassHealth.

Because the assets are held by a trust and not an individual, it is much harder for creditors to access the funds. Families often create trusts for individuals who are still learning how to manage money. They also create trusts for loved ones with special needs so that those loved ones can remain eligible for government benefits yet still have access to additional resources.

Operations of an Irrevocable Trust

To accomplish their objectives, trust documents and operations must comply with federal and state requirements. The person creating the trust—often called the grantor—has their estate planning attorney create the trust according to the desired goals. Then the grantor contributes property into the trust. An irrevocable trust can be funded with any type of property, including real estate, stocks, and personal property. However, some property may need to be liquidated to fulfill the trust’s objectives.

Once the property has been moved into the trust, the grantor cannot remove it again. It must be used to fulfill trust purposes. That’s why the government allows a trust to accomplish goals like tax reduction.

The property in the trust is not controlled by the grantor but by the trustee who manages it for the ultimate good of the beneficiary.

An Irrevocable Trust Differs from a Revocable Living Trust

The revocable “living” trust that is popular as a means of avoiding probate differs from irrevocable trusts in several respects. When you create a revocable trust, you can revoke or change it at any time, so long as you remain legally competent. You can also manage the assets by serving as trustee and reap all the benefits as the beneficiary. For that reason, the government will not allow you to use this type of trust to protect property from creditors or decrease your assets for benefit eligibility.

You may be able to the receive proceeds of an irrevocable trust, but you cannot control how funds are managed. You give up some control in order to get protection.

Rest assured, however, that the trustees are under a fiduciary duty to manage trust property for the best interests of the beneficiaries. If you work with a reputable trustee, the trust property will be maintained as well as if it were still under your direct control.

Jordan & White Can Develop the Right Trust to Meet Your Needs

Every family situation is different, and that means everyone has different needs. Fortunately, at Jordan & White, LLC, we know how to use a variety of irrevocable trusts to accomplish many different goals.

We invite you to talk to us about the ways we can conserve your assets through an irrevocable trust. Just give us a call.