What is an irrevocable trust?
An irrevocable trust is a permanent trust arrangement that cannot be changed, modified, or dissolved once established, typically used for asset protection, tax reduction, or Medicaid eligibility planning.
Once you create an irrevocable trust and transfer assets into it, you give up the right to reclaim those assets or change the trust's terms. This permanence is the defining feature that separates an irrevocable trust from a revocable living trust, which you can alter or dissolve during your lifetime.
The tradeoff is deliberate. You lose control over the assets in exchange for real legal protections. Because the assets technically no longer belong to you, they become shielded from creditors, lawsuits, and your own estate taxes. Irrevocable trusts are commonly used for Medicaid planning, since assets held in the trust typically do not count toward the asset limits that determine eligibility for long-term care benefits. They also reduce the size of your taxable estate, which can lower federal estate taxes for larger estates.
The cost of losing control is substantial, which is why an irrevocable trust makes sense only for specific goals. If you may need the money later, or if you want the flexibility to adjust your plan, a revocable trust is usually a better fit. An estate planning attorney can help you decide whether an irrevocable trust aligns with your situation and which type of irrevocable structure, if any, suits your goals.