Can I Convert a Revocable Trust to an Irrevocable Trust When I Apply for Medicaid?
I recently had my living trust updated after 20 years. Now I regret that I didn't convert the trust to an irrevocable tru...Read more
Parents and other family members who want to pass on assets during their lifetimes may be tempted to gift the assets. Although setting up an irrevocable trust lacks the simplicity of giving a gift, it may be a better way to preserve assets for the future.
A trust is a legal entity under which one person -- the "trustee" -- holds legal title to property for the benefit of others -- the "beneficiaries." The trustee must follow the rules provided in the trust instrument. An "irrevocable" trust cannot be changed after it has been created. In most cases, this type of trust is drafted so that the income is payable to you (the person establishing the trust, called the "grantor") for life, and the principal cannot be applied to benefit you or your spouse. At your death the principal is paid to your heirs. This way, the funds in the trust are protected and you can use the income for your living expenses.
While gifting assets outright is much simpler process than setting up a trust, the following are some of the advantages of setting up a trust instead:
To set up an irrevocable trust, contact your attorney. To find an attorney near you, click here.