Irrevocable Trusts are a trust that can’t be modified or terminated without the permission of the beneficiary. The grantor, having transferred assets into the trust, effectively removes all of his or her rights of ownership to the assets and the trust.
This is the opposite of a “revocable trust,” which allows the grantor to modify the trust.
The main reason for setting up an irrevocable trust is for Medicaid planning for the nursing home, as well as estate and tax considerations. The benefit of this type of trust for estate assets is that it removes all incidents of ownership, effectively removing the trust’s assets from the grantor’s taxable estate.
The assets held in the trust can include, but are not limited to, a business, investment assets, cash and life insurance policies.