Irrevocable Trust Benefits
What is it?
An irrevocable trust cannot be modified or revoked by the grantor after creation (with limited exceptions). Once assets are transferred, they're no longer legally yours. This "giving up" of ownership is precisely what creates powerful protections—assets outside your estate can't be reached by your creditors, aren't counted for Medicaid eligibility, and aren't subject to estate tax.
Why is it important?
While giving up ownership sounds scary, irrevocable trusts offer benefits revocable trusts cannot: true asset protection from lawsuits and creditors, estate tax reduction for large estates, Medicaid planning (after the look-back period), generation-skipping for dynasty wealth, and protection from beneficiaries' creditors and divorces. The key is strategic design that preserves practical benefits while achieving legal protection.
Example Language
The Grantor hereby establishes this Trust as irrevocable. The Grantor shall have no power to alter, amend, revoke, or terminate this Trust. Assets transferred to this Trust shall not be subject to the claims of the Grantor's creditors and shall not be included in the Grantor's taxable estate.