Irrevocable trust (general)
A trust you cannot amend or revoke after it's signed. Trades control for benefits the revocable version can't give you — estate-tax exclusion, asset protection, Medicaid planning.
An irrevocable trust permanently gives up your ownership and control over the assets transferred into it. In exchange for that surrender, the trust can achieve things a revocable trust cannot:
- Remove assets from your federally taxable estate (relevant above the exemption threshold).
- Protect trust assets from your own future creditors (varies by state).
- Potentially qualify you for Medicaid long-term-care benefits after a five-year look-back period.
- Continue across generations (dynasty trust, generation-skipping trust).
Irrevocable trusts come in many specialized forms — for life insurance, for appreciating assets, QPRT for a personal residence, / for charitable giving, for spousal use, for asset protection in states that allow them. Each of these is its own option in the library.
Tagged 🔴 because there is no "undo" — signing an irrevocable trust you later regret is a very expensive mistake. Work with an estate-planning attorney.
State-specific notes
For federal income tax, an irrevocable trust is usually a non-grantor trust and files its own Form 1041, unless specifically structured as a grantor trust (IDGT). Assets transferred to an irrevocable non-grantor trust are generally removed from your federal gross estate.
Virginia authorized self-settled asset-protection trusts in 2012 under Va. Code § 64.2-745.1 (5-year creditor look-back; requires a qualified independent trustee; settlor may not serve as sole trustee). Enforceability is untested in Virginia appellate courts, so many practitioners still recommend a belt-and-suspenders out-of-state situs (Nevada, Delaware, South Dakota, Tennessee, Wyoming) with a qualified trustee there. Virginia has adopted the Uniform Trust Code (Title 64.2, Chapter 7).
West Virginia does not authorize DAPTs either. Same as Virginia — if asset protection is the goal, an out-of-state trust situs (Nevada, Delaware) is usually required.
Alabama adopted the Uniform Trust Code at Ala. Code § 19-3B-101 et seq., which governs most irrevocable trusts created or administered in the state. Alabama has no state-level estate or inheritance tax (repealed for deaths after 12/31/2004), so federal §2036/§2038 completed-gift analysis drives irrevocable-trust design here. Spendthrift clauses under Ala. Code § 19-3B-502 are enforceable against most beneficiary creditors (subject to the § 19-3B-503 exceptions).