What is an Irrevocable Trust For?

The large majority of estate planning clients create Revocable Trusts. A Revocable Trust is a great estate planning tool used to avoid probate and plan for your disability and death. A Revocable Trust is amendable and, yes, revocable for the rest of your life. Usually, you will serve as the Trustee of your own Revocable Trust, and you are free to add, remove, buy, sell, and do whatever you want with your trust assets.

An Irrevocable Trust is a more extreme form of estate planning. You cannot serve as the trustee of your Irrevocable Trust – most people select their children. Generally, you do not retain the right to buy, sell, add, remove, and control the trust property, and you cannot modify the trust document. In practice, it is as if you are giving away your property to the trust and giving up all legal rights to it except the right to reside in your home.

“Whoa, Trevor. That sounds like giving up a lot of control! Why would anyone do that!?” Medicaid, my friend. Medicaid.

If you wind up in a nursing home long-term, Medicare is only going to pay for it for about 20 days. After that, Medicaid will only pay for it if you do not have the assets to pay for it yourself. This results in people wiping out their life savings and their kids’ inheritance on the nursing home. If your assets are in a standard Revocable Trust, Medicaid can still count them and will disqualify you from benefits until they have been depleted.

But, if your assets are in an Irrevocable Trust, and more than five years have passed since the transfer, then Medicaid cannot count those assets because they are not considered yours anymore!

Irrevocable Trusts are a very complex form of estate planning that should be discussed one-on-one with an attorney if you are interested. They are generally not a great tool for younger clients who are not ready to give up control of their assets just yet. But, you also cannot wait until you are on the doorstep of the nursing home because of that “five-year lookback” period.

Jon and Rhonda enjoyed a trip to San Diego for Thanksgiving to see family and enjoy restaurants with fresh seafood – which isn’t too accessible in Great Falls, Montana.

Trevor is in the process of closing on his first-ever home and is excited to start remodeling. He apologizes if he shows up to a meeting with paint-covered hands.

Henry loves Christmas and cannot wait to spread holiday cheer by caroling and baking cookies with the help of his cats.

Chafaye and her daughter Alize picked out a tree at the Uptown Optimist Tree Lot and will spend Christmas with family.

Chris and Rich will spend a quiet Christmas at home this year with all the four-legged critters and hopefully a horseback ride on Christmas Day.

Sam and her family celebrate Hanukkah. They look forward to the Hanukkah exchange party every year! Sam is one of five and Terrence is one of six, with eight nieces and nephews, making it a large event with food, laughter, and holiday games!

The Squires family is excited for Aurora’s very first Christmas! Theo is excelling both in Taekwondo and in being a big brother.

Jeanne can never have enough grandbaby time and is excited to have the whole family together for the holidays.