Irrevocable Trusts may be used for estate planning or long term care planning purposes to protect assets. Irrevocable Trusts, like Revocable Living Trusts, have Settlors (who set up the trust), Trustees (who manage it) and beneficiaries (who receive benefits from it). The Settlors are not usually the Trustees since these types of trusts are used to remove assets from being considered as belonging to the Settlors. What are some uses for Irrevocable Trusts? 

One use for Irrevocable Trusts are to hold life insurance policies, known as Irrevocable Life Insurance Trusts or ILITs.  The life insurance policies held by the ILITs are on the lives of the Settlors; so that, after the Settlors have passed away, the life insurance proceeds can pass free of federal estate tax to the beneficiaries, usually children or grandchildren.  To protect the life insurance proceeds from being considered as part of the Settlor’s Estate, the ILIT must be created at least 3 years prior to death. 

Another use for Irrevocable Trusts is to protect assets from having to pay for long term care.  An Irrevocable Income Only Trust or IIOT, which may pay the income generated by the Trust assets to the Settlors but never allows them access to the principal.  As long as the Settlors do not have access to the principal and cannot use the principal to pay their creditors, the Trust assets are not considered available to the Settlors.  To protect assets, the IIOT should be set up 5 years prior to the Settlors needing long term care and Medicaid.   

Whether Irrevocable Trusts are appropriate for your family are questions best answered by an experienced elder law attorney.