The Listen to Lawrence Letter: Can you revoke an Irrevocable Trust?

March 16, 2022
Dear Clients and Friends,
Hi Lawrence:
Question regarding the trust that your firm set up: Our house was put in an irrevocable trust (my son as trustee) for Medicaid benefits for my wife. It was set up as a joint trust as both myself and my wife were the owners. My wife has passed on and the Medicaid services stopped once she passed away. Should I keep the Trust? Thank You.
Hmmmmm, Let’s take a dive into the dictionary:
Definitions from Oxford Languages —
not able to be changed, reversed, or recovered; final.
“an irrevocable step”
So, let’s be clear. An irrevocable trust is just that…irrevocable. These irrevocable Medicaid trusts cannot be revoked. But is this really true? The
truth is that all these irrevocable Medicaid trusts cannot be revoked by the Grantor(s) alone. It is true that the Grantor(s) can ask the trust beneficiaries to agree to revoke it. AHA! So you may now be thinking that all irrevocable trusts can be revoked if you get all of your children to sign off on it. The answer is maybe if all the beneficiaries are competent and at least 18 years old and will actually agree to the revocation. You can potentially get around this by exercising the power of appointment in your trust to change the trust beneficiaries to one beneficiary who is of age and competent and agreeable. Nevertheless, there is nothing requiring a beneficiary to agree to revoke the trust.
However, once the grantor or one of the grantors is deceased, the trust can no longer be revoked, even with the consent of the beneficiaries. So the answer to the question above is you HAVE TO keep the trust. But why is this a bad thing? The trust will continue to offer Medicaid protection for the second spouse in the future.
I hope this helps! Please forward this information to your friends and relatives to share these informative answers to some very commonly asked questions.
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As always, please send me your questions. If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.
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Stay safe!
Until next time,
Peace, health and happiness,
Lawrence Eric Davidow