Understanding Irrevocable Trusts
Good morning, Oklahoma. This is Katrina Lucas. I’m a Tulsa business attorney with Wirth Law Office.
I’m here to answer a common question that comes up in many of my client meetings when we talk about estate planning—and that is: what is the difference between an irrevocable and a revocable trust?
Benefits of Irrevocable Trusts
An irrevocable trust means that once it’s funded—once the items are in the trust—they cannot be removed back to your name at your own discretion. An irrevocable trust is managed by somebody else. It requires you to have a trusted advisor, a trusted family member, or a trusted friend to control those assets on your behalf.
The benefit of an irrevocable trust is that those assets are not counted by the government when determining your estate value. So, if you are looking at Medicare or Medicaid situations—long-term in-home care or facility care—those assets won’t count as yours, provided you set up the trust well before those needs arise.
Considerations for Irrevocable Trusts
The reason you might not want an irrevocable trust is that, if it’s not set up correctly with the tax code, it can be taxed much higher than your normal assets. You have to use specific tax codes to prevent higher taxation. An irrevocable trust requires its own tax ID number, and every item must have a signatory other than you.
Still, an irrevocable trust is often a better option than nothing when it comes to estate planning—especially if you anticipate long-term care and Medicaid or Medicare involvement.
Contact Us for Estate Planning Assistance
If you have any questions or want to discuss estate planning, please reach out to me at Wirth Law Office. I’m always happy to help with trusts and estate planning. I’d much rather be involved in the planning stage than be hired during a probate.
This is Katrina Lucas, a Oklahoma cannabis business attorney with Wirth Law Office in Tulsa, Oklahoma. Stay safe, stay legal. Call us at (918) 932-2879 to schedule a consultation.