In this Elder Law Minute, Wes Coulson explains the difference between a revocable trust and an irrevocable trust.
Hi! I’m Wes Coulson from Coulson Elder Law, proudly serving clients throughout the St. Louis metropolitan area and beyond. I’d like to welcome you to our Elder Law and Estate Planning Minute. We do these to help educate people, give them some little tips, and especially to let them know the questions they need to ask, things that they’ve maybe not thought of. Our thought on that is that we can help you best if you realize the things that you need help and that we can help you with. So I hope you enjoy. Thanks!
Sometimes we’ll have people call and they’ll say “I want to have an irrevocable trust”, or “I want to have a revocable trust”, and, I think when they are saying that, it probably means that they don’t really understand the difference between the two. So, let me help with that!
A revocable trust means that you can get rid of it, you can change it, at any point that you want to. In that sense, it’s like a will, and if you’re using a living trust you always want it to be revocable because you want to have the ability and opportunity to make changes to your estate plan to respond in changes in your life circumstances that might occur between the time that you put it in place and the time that you die.
So, when would you use an irrevocable trust? Well, in those instances, it’s not really so much because you don’t want to have control, but because you want to accomplish a particular purpose. Particularly in the context of Medicaid planning, if your trust is revocable, Medicaid counts the assets in that trust as still belonging to you the same as if you didn’t have a trust at all. It’s the fact that it’s irrevocable, which means you can’t change it, it’s set in stone, you can’t be the trustee, and no money can come directly out of that trust back to you. Those are the things that make Medicaid, and similarly the VA, treat the assets in that trust as no longer belonging to you.
So, an irrevocable trust is used in the context of gifts. If you’re high net worth, the same thing would apply, getting money out of your estate to avoid estate taxes. And those are the situations in which you use irrevocable trusts. Thanks!
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Coulson Elder Law is dedicated to providing families in the St. Louis area with their Elder Law needs. Our practice areas include Asset Preservation Planning, Veterans Benefits, Medicaid Eligibility, Alzheimer’s Planning, Special Needs Planning, Estate Planning and more. We understand the financial challenges you may face as you and your loved ones grow older. At Coulson Elder Law, our clients’ well-being is our number one priority. For immediate help, call (618) 632-7000 (IL) or (314) 567-9292 (MO), or Contact Us and we will get in touch as soon as possible.