Irrevocable Trusts. #estateplanning #assetprotectionplanning #irrevocabletrust

10 Mar 2023 · 1 min

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In this concise estate‑planning briefing, the speaker outlines the only three situations where an irrevocable trust is truly necessary. First, for very high‑net‑worth individuals—single persons with assets over $12 million or couples with assets over $24 million—an irrevocable trust can provide significant tax advantages. Second, the trust can preserve eligibility for government benefit programs, such as disability benefits for a child or future Medicaid coverage for long‑term care, by removing assets from the beneficiary’s ownership. Third, an irrevocable trust offers protection against lawsuits and creditor claims by placing assets under the trust’s ownership. The speaker also clarifies that if the sole goal is to avoid probate and keep heirs out of the court process, a revocable trust is sufficient because the grantor retains ownership.

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There are only 3 reasons why you or anyone else would ever need an irrevocable trust. Once you put money or property into an irrevocable trust, you no longer own it. The trust does. Reason number 1, you've got a lot of money. If you're a single person with more than $12 million or a couple with more than $24 million, then you might need a type of irrevocable trust that would benefit you from a tax standpoint. Reason number 2, you're trying to protect government benefits. If you have a child with disabilities that's on government benefits, Or if you expect that you may need Medicaid benefits for long-term care, an irrevocable trust would help in those situations. Last, if you need protection from lawsuits or creditors, an irrevocable trust is the way to go. But if all you want to do is protect your heirs from getting caught up in the probate process when you die, you need a revocable trust.