Living Trust

Irrevocable Living Trust

Learn here what an irrevocable living trust is, and who should have one.

An ‘irrevocable’ living trust is a trust that cannot be changed after it is created. A trust is a legal arrangement where one person (the “trustee”) holds legal title to the property for the benefit of others (the “beneficiaries”). The trustee must follow the rules provided in the trust and—depending on the type of trust created—the assets may be counted as a resource and may affect your Medicaid eligibility.

An irrevocable living trust is created so that income from the trust is payable to you, the person who established the trust, for life. However, you have no access to the principle that is placed in the trust. This is actually the main difference between a revocable living trust and an irrevocable living trust: the principal of an irrevocable living trust cannot be touched at all during your life. When you die, the principal would be paid to your heirs as stipulated in the trust.

Since a revocable trust is one that may be changed or taken back by the person who created it, many people opt for this type. But, there are many benefits to be had with an irrevocable living trust. For example, as mentioned above, an irrevocable living trust can help you qualify for Medicaid. Even though you may not be planning to use the assets in a revocable trust, you still have access to them, therefore your worth increases. In an irrevocable trust, since you have no access to the assets, it is not considered a part of your estate.

If you aren’t sure if an irrevocable living trust is right for you, you can find out more from an estate planning attorney, elder law attorney, or other estate planning professional.