Irrevocable trusts cannot be changed. They are permanent trusts.
Asset Protection: When you place your assets in irrevocable trust, you remove ownership and control of those assets from the creator of the trust. These types of trusts are used for Medicaid planning purposes. It should be noted that there is a five year look-back period for medicaid eligibility. The assets placed in these trusts cannot be reached by creditors of the individual who made the trust. One type of irrevocable trust is called a self-settled irrevocable trust.
Life Insurance: Another type of irrevocable trust is called an irrevocable life insurance trust. If you purchase life insurance and transfer the policy into an irrevocable life insurance trust, the proceeds of the life insurance pass outside of your estate. They therefore are not taxed as part of your estate.
Tax Purposes: You can also create an “AB trust” for the benefit of your surviving spouse. This type of trust allows you to use the spouse’s exemption from estate taxes by funding the “B” trust with assets valued at or below the federal estate tax exemption rate, in the event the value of the deceased spouses estate assets is greater than the estate tax exemption at the existence of time of death. The “A” trust would be funded for the benefit of the surviving spouse. Estate taxes in this situation are deferred until after the surviving spouse dies.
Should you have questions regarding irrevocable trust contact the trust attorneys at the Law Offices of Schlissel DeCorpo by email or at 1-800-344-6431.
