What's the difference between a Revocable and Irrevocable Trust?
Unlike a Revocable Trust where the terms of the agreement can be changed, an Irrevocable Trust is an agreement that the person (Grantor) makes a Trust to manage property by a third party Trustee, usually for the benefit of another.
In most cases, an Irrevocable Trust is used for asset protection, but in exchange, the Grantor loses control of the assets. With very rare exceptions, once the Irrevocable Trust is finalized, there can be no changes to the document and the Grantor's wishes are set in stone.
As a related concept, after the death of a Grantor in a Revocable Trust, the agreement will also become Irrevocable, as the Trust can no longer be changed.
Why would I want to use an Irrevocable Trust?
Most commonly, an Irrevocable Trust is used in the following two contexts: First, in planning for long-term care advance planning and potential qualification for Medicaid. The second, in asset protection planning for loss prevention.
Irrevocable Trust Agreements are usually more complex, and must be very carefully constructed because there are "no give backs" to the Grantor.
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