There are multiple kinds of trusts, one of which is an irrevocable trust, meaning that it cannot be revoked or terminated without court intervention. There are two types of irrevocable trusts, (1) those where the resources held in the trust benefit the creator of the trust; and (2) those where the resources are for the benefit of another person or persons. For asset protection purposes, which is the most common reason for creating irrevocable trusts, the creator of the trust usually cannot have any control or must at least have limited control of the assets. Thus, the type of irrevocable trust used most often is the one where resources are held for the benefit of another person.
Growing in popularity, an Irrevocable Medicaid Asset Protection Trust is used to transfer assets away from the owner in order to have them protected in trust so a person may qualify in the future for Medicaid to pay for nursing home care. In Missouri, Medicaid was renamed MO HealthNet, and the program which assists in paying for nursing home care is known as Vendor MO HealthNet. Similarly, an irrevocable trust is used to hold assets for purposes of qualifying a person for the Veterans Administration’s Aid and Attendance pension benefit. Irrevocable trusts can work effectively in these situations because the original owner of the assets has no control or ownership of the assets anymore, making the transfer of assets to the irrevocable trust function as a gift of the assets away from the owner.
Additionally, Special Needs Trusts are also irrevocable trusts. They are of the type where the resources benefit the special needs or disabled person, but another party establishes the trust. Click here to read more under the Special Needs Trusts section.