Irrevocable trust
A trust that generally cannot be changed or undone once created. Giving up control is the point of it.
What it means
An irrevocable trust separates the property from the person who created it: they no longer own it and generally cannot take it back.
That separation is what produces the effects it is used for — removing assets from a taxable estate, protecting them from creditors, or positioning them for Medicaid planning.
Irrevocable is not always absolute. Many states allow modification with the agreement of the beneficiaries, by court order, or by moving the assets into a new trust.
Why it matters
It is a real and largely permanent decision, made years before its effect is felt, and it is frequently proposed to families in the middle of a care crisis.
For Medicaid purposes it also interacts with the look-back period, so a transfer intended to protect a house can create a penalty at the moment care is needed.
When you are likely to meet it
- When a lawyer proposes one for asset protection.
- When a parent's care costs are becoming a concern.
- When reading a trust that cannot be amended.
How this varies by state
Whether and how an irrevocable trust can be modified is set by state law and differs considerably.