An irrevocable trust is one that you typically cannot modify, amend, revoke or change in any way. There are rare situations that allow for some alteration, but, generally speaking, the trust has to stay exactly as it was when you set it up. The assets are no longer yours. Now they belong exclusively to the trust.
People often do this to avoid estate taxes. If your estate is large enough that you will have to pay significant taxes, putting money in a trust that pays out to your heirs is a good way to get down below the tax threshold and still give that money to your family.
Now, you may not be all that worried about taxes due to the size of your estate, but there is still a very good reason to consider an irrevocable trust. It can protect your access to government benefits.
Eventually, you may need medical care and nursing home care. This can be very expensive, and it often drains people’s estates as they move into the later years of their lives. This can leave far less or nothing at all for your heirs.
Putting the money into the trust protects it from this process and may allow you to qualify for specific benefits from the government to help cover your costs. These could include Supplemental Security Income and Medicaid. The money in the trust does not count toward your estate, so you ensure that your wealth really goes to your heirs, not to a nursing home.
This is just one benefit of using a trust, but it helps to show you why it is so important to understand all of your estate planning options.