Irrevocable Living Trust

Although a revocable living trust (RLT) is a great way to avoid the complexities and expense of probate, it does not protect you against creditors (including credit card companies or an unexpected lawsuit), nursing home long-term care costs, or even divorce.  An irrevocable living trust, otherwise known as an irrevocable pure grantor trust (we call it an iPug® trust) protects against all of these threats, and still provides you with a significant level of flexibility.

It is a common misconception that an irrevocable trust cannot be changed after it is created.  While this is true of many irrevocable trusts that are created to avoid taxes, irrevocable trusts like an iPug® that are used for asset protection do allow you to have much more control, and you get to decide to what extent you exercise such control.  Even though the iPug® is irrevocable, you can still choose to:

• Be the trustee or change the trustee
• Receive all of the trust income
• Change the asset and/or investment within the trust
• Live in and use trust real estate
• Change beneficiaries
• Make distributions to beneficiaries during your lifetime (i.e., help children pay for education)

Debtor/Creditor law provides that whatever you can get, your creditors can get.  For instance, an iPug® that allows you to receive only the income generated by the assets in the trust means that you would give-up your rights to the principal, but you your creditors – including Medicaid – can never have access to the principal, either.  In an iPug®, you can retain the right to change who gets your assets during your life and after your death, and maintain 100% control of your assets until your mental disability or death.

An iPug® is a very effective way to protect you assets, but it is a highly technical type of trust.  Make sure that you work with an attorney who is knowledgeable about this particular type of trust.