What does the word Irrevocable Mean?
How is it different from a Revocable Trust? Are they the same thing? These are questions I get all the time. So let’s clear this all up. First, please watch the short video below in which I explain what the heck Irrevocable really means.
Now that you have the idea of what Irrevocable means, how does that apply to a Trust. Basically an irrevocable Trust is a Trust in which you have made the decision not to have the capacity to REVOKE it. This means that it is permanent and that whatever you set forth in the Declaration of Trust is the way it will stay.
When should I use an Irrevocable Trust?
As the video points out, this type of Trust is ideal for things like Gifts, which you would like excluded from your estate, and most importantly for this discussion ASSET PROTECTION. In fact, it is the nature of the irrevocability of the Trust which gives it such powerful asset protection features. Basically, since you have not reserved the right to revoke the Trust, the court must consider the Trust document, including all of the protective provisions.
Do I lose control in an Irrevocable Trust?
Does this mean that if you create an irrevocable trust you have no influence whatsoever? Not at all. In fact, you can (and should) retain quite a bit of influence over the Trust. This is particularly true with an Offshore Asset Protection Trust, in which you are also the primary beneficiary. The key to that is that there will be 2 sets of rules about when and how you, as the Settlor, can influence the Trust. This gets into the skillful drafting of a good APT, and I recommend you see the section on the Asset Protection Trust for more details.
The Bottom Line
The bottom line is that the skillful use of an Irrevocable Trust is both desirable and useful in many cases. And if Asset Protection is your goal, then it is essential, and you don’t have to lose control to do it!