Establishing a trust is one way you can avoid probate. By putting money and property in a trust, you can pass those assets to people you wish to inherit from you. You might even be the beneficiary of a trust yourself. Generally, trusts are either revocable or irrevocable.
According to U.S. News and World Report, an irrevocable trust differs from a revocable trust in that you lose your rights over the money you place in an irrevocable trust. You also cannot change or abolish an irrevocable trust. In spite of possible drawbacks, this type of trust can still help individuals in certain situations.
Protect assets from creditors
Some people work in professions that expose them to a greater risk of lawsuits. Doctors are a common example. Parties that sue you might try to collect payments from your personal assets. However, you do not own money you place in an irrevocable trust, making it virtually impossible for creditors to claim it.
Avoid estate taxes
Having a larger estate means you have more estate taxes to worry about. People who wish to avoid losing money to taxes place money in an irrevocable trust to reduce the size of their estate. This helps preserve as much of an inheritance as possible for family members and other beneficiaries.
Qualify for benefits
If you live for a long time, you might require Medicaid assistance, especially if you plan on moving to an assisted living facility. It is possible to reduce your assets to qualify for Medicaid or military benefits by moving money to an irrevocable trust. Take care that you do not do so within a Medicaid look-back period or you may incur a penalty period.
While irrevocable trusts are not for everyone, they present benefits that can help some people in certain circumstances.