Irrevocable Trusts can be a powerful estate planning tool. They can help to protect your estate from creditors and also help you obtain government benefits without “losing” all of your assets.
However, Irrevocable Trusts also contain many hidden dangers and must be done with care and caution. One feature of an Irrevocable Trust is that you must put SOMEONE ELSE who is not you in charge of your estate. If this person or persons are not 100 percent trustworthy, you will be in for a very rough ride as your estate disappears and you may be unable to stop the looting of your estate until it is too late.
Another problem is that, when applying for government benefits, unless much care is taken, governmental agencies (such as Medicare and Medicaid or AHCCCS) may have “clawback” provisions rendering the trust useless against their taking of the estate.
If you would like to discuss the benefits and potential problems of IRREVOCABLE TRUSTS in your estate plan, please contact our office.