Is an Irrevocable Trust Really Irrevocable…Probably Not
Question: My children are urging me to create an Irrevocable Trust to protect my assets. I am concerned that once I create the trust, I won’t be able to access the money that I put in if the time comes that I need it.
Answer: Your concern is a valid one, however let me assure you that even though the trust is termed “Irrevocable” it still may be revoked or amended so long as you meet certain criteria. New York Estate Powers and Trusts Law, the law governing trust administration, states that the Grantor (the person who created the trust, in this case, you) can terminate or amend an Irrevocable Trust during her lifetime provided that she can obtain the consent of those who have a beneficial interest in the Trust. In other words, so long as you have the consent of the beneficiaries (those who you are leaving the assets to upon your death) you can alter amend or revoke the trust at any time. For example, you create a trust and fund the trust with your home and a brokerage account valued at $300,000.00. As you likely know, once these assets have been in the trust for five years they are completely protected and considered unavailable should you need to apply for Medicaid. Now imagine that four years into the creation of the trust you run low on funds and need $50,000.00 out of the trust. Once you obtain written consent from the beneficiaries and the trustee (presumably your children) the trustee of the trust (he or she is the person that you name to manage the trust assets during your lifetime) can write a check to you for $50,000.00 without disturbing the Medicaid “clock” that started running four years earlier, allowing you to get the money that you need while still protecting the other assets in the trust. Additional flexibility is also available when a trust is drafted is such a way that you as the grantor, maintain the ability to replace the trustees and beneficiaries during your lifetime. Where the trust allows you to remove and replace both the trustee and beneficiaries at your discretion, in essence you maintain final control of your assets. If the time should come that you have a trustee or beneficiary who does not cooperate, you simply remove them and replace them with someone who is willing to cooperate with you. Even with this flexibility it is important to make thoughtful choices about who you name as trustee and beneficiary. Assuming that you do, an Irrevocable Trust offers maximum protection with a relatively minimal loss of control.
By Nancy Burner, Esq. and Robin Burner Daleo, Esq.
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