While a Revocable Trust permits you to maintain full control (as Trustee) and have access to all your assets (as beneficiary), an Irrevocable Trust, once created, may prohibit your right to control the trust (as Trustee), or have access to your assets. You get to decide to what extent.
Debtor/Creditor law provides that whatever you can get, your creditors can get. You can have known creditors (i.e. bank/credit card debt) or unknown potential creditors such as unforeseen lawsuits or the need for nursing home care. A typical “income only” irrevocable trust permits you to receive the income on your assets, but you must give up your right to your principal. In some irrevocable trusts, you can retain the right to change who gets your assets during your life and after your death, and maintain 100% control of your assets until your mental disability or death. These are asset protection trusts.
It is a common misconception that irrevocable trusts, once created, cannot be changed. While that is true of many irrevocable trusts created to avoid taxes (tax reduction or avoidance trusts), it is not true of all irrevocable trusts. An irrevocable trust is a trust you create for the benefit of yourself or others, and you as Grantor, must give up your right to something.
For those individual who are trying to protect assets from future nursing home costs, a Medicaid Asset Protection Trust may be the answer. We can determine if a Medicaid Asset Protection Trust is the tool to include in your estate plan to provide asset protection to insure your assets go to your children and not to the nursing home.