Key Takeaways:
- Irrevocable trusts can shield assets from long-term care costs and estate taxes.
- These trusts are not easily changed; professional guidance is key.
- An experienced irrevocable trust attorney helps ensure your wishes are protected.
- Families across Middle Tennessee use them to preserve generational wealth and qualify for Medicaid.
When Nashville-area clients consult with us about estate planning, they quickly learn that the task involves far more than just writing a will; it’s an exercise in protecting everything they’ve worked so hard for. Depending on the family’s unique financial and personal circumstances, Elder Law of Nashville’s estate planning recommendations may include:
- Probate avoidance strategy.
- Asset protection and Medicaid plan.
- Federal estate tax plan.
- Durable (financial) power of attorney.
- Healthcare power of attorney.
- Medical directives.
- Advanced care plan (living will).
- Guardianship for minor children.
- Revocable trust.
- Irrevocable trust.
Our estate planning clients in middle Tennessee typically have many questions, and one we hear frequently is, “What is an irrevocable trust, and do I need one?”
With long-term expertise as an irrevocable trust attorney, Elder Law founder Barbara Moss says an irrevocable trust can be an invaluable legal tool to help an estate protect its assets and ensure Medicaid (TennCare) eligibility. However, because the grantor relinquishes control over the assets placed in trust, an irrevocable trust is not necessarily suitable for all families. Let’s examine how irrevocable trusts work in Tennessee and how an irrevocable trust attorney can help you determine if it’s the right option for your estate planning.
What Is an Irrevocable Trust?
Under Tennessee law, an irrevocable trust is a legal arrangement under which the grantor transfers distinct assets into a trust, ceding control and ownership of the assets to a trustee, who has a fiduciary responsibility to manage the trust for the best interests of the beneficiaries. Assets can include real estate, cash, investments, or other property, and the terms of the trust name beneficiaries (including the grantor, if desired) who will receive trust benefits, such as income or principal distributions, as dictated. Once established, an irrevocable trust can only be altered, amended, or revoked by the grantor under exceptional circumstances, as approved by a court under the Tennessee Uniform Trust Code.
Why Would Someone Want an Irrevocable Trust?
If you’re wondering why anyone would give up control over their assets, know that assets in an irrevocable trust are no longer considered part of the grantor’s property, which protects them from:
- Long-term care/nursing home expenses.
- Estate taxes
- Probate
- Creditors
And it helps the grantor pass on their legacy, preserving the assets for their children and grandchildren.
For real-world examples of reasons why a person might establish an irrevocable trust, Barbara Moss says she recently formulated one for a widow in Franklin who wanted to pass her home down to her daughter, without having to worry that future nursing home costs might force her to sell it. Similarly, a Nashville couple allocated a sufficient portion of their assets to an irrevocable trust, thereby qualifying for Medicaid while still benefiting from trust income from their retirement savings.
What Can Go Wrong Without Legal Guidance?
Irrevocable trusts are complex legal instruments in Tennessee that require careful structuring to ensure optimal asset protection and preservation. Guidance from an experienced irrevocable trust attorney, like those of Elder Law of Nashville, is invaluable in ensuring this protection and avoiding potential trust pitfalls like:
- Creating a trust too late for Medicaid eligibility.
- Naming the wrong trustee.
- Placing the wrong assets into the trust (e.g., IRAs).
- Losing access to resources you didn’t mean to give up.
- Unforeseen tax consequences.
How an Irrevocable Trust Attorney in Nashville Helps
When Elder Law of Nashville recommends an irrevocable trust as part of your estate planning, you can be sure that it will be structured in a way to provide maximum asset protection and peace of mind for you and your heirs. When developing an irrevocable trust for their clients, Elder Law of Nashville:
- Establishes that an irrevocable trust is ideally suited for the family’s goals.
- Recommends the right timing and structure to ensure maximum asset protection.
- Ensures income and principal distribution correctly meet the grantor’s wishes and beneficiary needs.
- Vets are potential trustees to ensure they will act in the best interests of the grantor and beneficiaries.
- Ensures that the family clearly understands the structure and legalities of the trust.
Elder Law of Nashville has established a stellar record with Tennessee families in helping make irrevocable trusts understandable and valuable, and not overwhelming or intimidating.
Learn More About Irrevocable Trusts with Elder Law of Nashville
An Irrevocable trust can be a powerful tool in helping Tennessee families protect assets while ensuring optimal care for their elderly members. However, they need to be set up with careful attention to relevant legal and financial implications. If you’re thinking about how to protect your home, savings, or legacy, now is the time to ask questions and plan accordingly.
Let’s talk about whether an irrevocable trust fits in with your estate planning goals. At Elder Law of Nashville, we’ll walk you through your options with warmth, clarity, and expertise. To learn more, schedule a consultation with us today.
FAQs About Irrevocable Trusts
What’s the main benefit of an irrevocable trust?
It protects assets from long-term care costs, probate, and some taxes, while preserving your legacy.
Can I access assets in an irrevocable trust?
Typically, no. That’s why they must be carefully planned. You give up control for protection.
What kinds of assets can go into an irrevocable trust?
Standard items include your home, savings accounts, or life insurance. Retirement accounts, such as IRAs, are usually excluded.
Do I still need a will or power of attorney if I have a trust?
Yes. A trust is a key component of a comprehensive estate plan. You still need legal documents for health, finances, and final wishes.