Can an Irrevocable Trust be Revoked?
March 1st, 2017
This edition of the Koldin Report E-Newsletter answers the question, “Can an Irrevocable Trust be Revoked?” All prior newsletters are saved on our website. You can read them by clicking here.
When attorneys at the Koldin Law Center meet with new clients at the free initial consultation appointment, we review together the differences between a Revocable Trust and an Irrevocable Trust.
A Revocable trust is a living trust created by a written agreement between you and the person you choose to manage the assets in the Trust. You may designate yourself to serve as trustee.
You may revoke or change the Trust at any time. You may reserve the right to withdraw income and principal at any time.
You designate the beneficiaries who will inherit from your Trust at the time of your death and avoid the costs and delays of probate.
Under the Medicaid laws, any assets that you can withdraw from your trust are not protected. Medicaid will require you to use those assets towards the cost of care in a Nursing Home or for Home Care.
A Revocable Trust does not protect your life savings or your family home in the event of a catastrophic illness. Since you can revoke the trust, Medicaid can force you to revoke the trust and withdraw all the trust assets and use those assets towards the cost of care.
The only type of Trust that will truly protect your life savings and your family home in the event of a catastrophic illness is an Irrevocable Medicaid Trust where the language of the Trust Agreement appropriately complies with the federal and state Medicaid requirements.
For those who do not want to use an Irrevocable Trust to protect your life savings, but still desire to achieve the other benefits of having a Trust such as avoiding the costs and delays of probate, then a Revocable Trust is ideal.
If you also want to protect your life savings with a Revocable Trust, then purchasing Long Term Care Insurance should be considered.
For a more detailed discussion about Revocable Trusts, please go to our website by clicking here.
For a more detailed discussion about Long Term Care Insurance, please go to our website by clicking here.
An Irrevocable Living Trust is created by a written agreement between you and the person you choose to manage the assets in the Trust, who is your Trustee.
You can appoint more than one person to serve as your Trustee. You can designate whether your Trustees must act jointly or whether any Trustee can act alone.
You designate the beneficiaries who will inherit from your Trust at the time of your death and avoid probate. You can change your beneficiaries at any time.
You do not reserve the right by yourself to revoke your Irrevocable Trust. Since you cannot revoke the Irrevocable Trust by yourself, your Trust is protected from a Medicaid Agency forcing you to revoke your Trust and take back your life savings to use towards the cost of care.
Since you cannot revoke the Irrevocable Trust by yourself, your life savings are protected.
For a more detailed discussion about Irrevocable Trusts, please go to our website by clicking here.
An Irrevocable Trust Can Be Revoked Pursuant to New York Law
Although you cannot revoke an Irrevocable Trust by yourself, New York law specifically allows an Irrevocable Trust to be revoked or modified by all interested parties.
New York law defines interested parties as the Grantors of the Trust and the Beneficiaries of the Trust.
For most of our clients, the interested parties to an Irrevocable Trust are the parents who create the Trust and the children who are the beneficiaries of the Trust.
Depending how the Trust is written, this means that the parents and children together can revoke an Irrevocable Trust.
At the Koldin Law Center, P.C. with offices in Syracuse , New York, we have over 50 years of experience helping individuals plan for immediate crisis and long term care. At the free initial consultation, we will review with you the advantages and disadvantages of Revocable Trusts and Irrevocable Trusts, along with other estate planning considerations including a Will, Power of Attorney, and Health Care Proxy.
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