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Can a Living Trust Be Irrevocable? Here’s What You Need to Know

Photo of an irrevocable trust and judge's gavel. Can living trust be irrevocable?

May people ask us “Can a living trust can be irrevocable?” The answer is yes. And in this post we will explain what an irrevocable living trust is and the pros and cons of creating one.

What are different types of living trusts?

There are two main types of living trusts: revocable and irrevocable.

What is a revocable living trust?

A revocable living trust can be changed or revoked by the person who created it at any time during their lifetime. (This assumes the person has mental capacity to make decisions.) You can read more about living trusts here.

Can a living trust be irrevocable due to the person’s mental incapacity?

Yes. In order for the grantor of the trust to be able to amend it, they must have mental capacity. A.R.S. § 14-10402(A)(1) provides that the settlor must have capacity to create a trust. The test for determining testamentary capacity for a will is “that the testator had to be able to understand the natural objects of his bounty, the kind and character of his property, and the nature of testamentary act.” In re Walter’s Estate77 Ariz. 122, 267 P.2d 896 (1954).

What is an irrevocable living trust?

On the other hand, an irrevocable living trust cannot be changed or revoked after it has been created. However, there are some exceptions to this rule, such as a court order or agreement between all parties involved. It’s important to consult with an estate planning attorney to understand which type of living trust is right for your specific needs and circumstances.

Advantages of an Irrevocable Living Trust.

Although an irrevocable living trust cannot be changed or revoked, there are still some advantages to choosing this type of trust. One of the main benefits is that it can provide greater asset protection compared to a revocable living trust. This means that assets placed in an irrevocable trust may be shielded from creditors and other legal claims. Additionally, because the creator of the trust no longer owns the assets, they may not be counted towards their taxable estate after death, which could help decrease estate taxes for their heirs. It’s important to speak with a qualified estate planning attorney before making any decisions about setting up a living trust, as both types have unique advantages and disadvantages depending on your individual circumstances.

Drawbacks of an Irrevocable Living Trust.

While an irrevocable living trust can offer some benefits, it also has some significant drawbacks you should consider before setting one up. One of the major downsides is that once you transfer assets into an irrevocable trust, you lose control over them. This means that if your financial situation changes or if you need to access those assets, you may not be able to do so easily or quickly. However, we use various ways of mitigating this. Here are three ways you can get access to money and assets in the irrevocable trust if you ever need it.

Ways to access assets in an irrevocable trust.

First, the person who creates the irrevocable trust can retain a special power of appointment. That will allow the trust creator to distribute assets to anyone, including themselves. This has been tested in courts over the last 200 years. As far as this author knows, every court that has considered the issue has held that such a trust is protected from the trustmaker’s creditors despite the trust including a special power of appointment.

Next, you can include the ability to name a Trust Protector. And you can give that person the ability to amend the irrevocable trust. This also allows you an enormous amount of flexibility to make future changes.

Finally, you can always simply borrow from the trust if you ever need money.

Ways to modify or terminate an irrevocable trust.

Another potential disadvantage is that because the trust cannot be changed or revoked, any mistakes in how it was established can have permanent consequences. Nevertheless, there are still ways to modify an irrevocable trust. First, you can have the Trust Protector make the change. Second, you can use your state’s decanting statute. (Arizona’s decanting statute is at A.R.S. Section 14-10819.) Third, you can go to court and ask the court to modify the trust. Of course, that is your last resort because going to court is more time-consuming and expensive. Also, some states allow for modifications or terminations with the consent of all beneficiaries and the creator of the trust.

Let Us Help You.

If you want to ensure that your assets are protected and distributed according to your wishes, it is important to have a solid estate plan in place. At our estate planning law firm, we understand that planning for the future can be overwhelming. But we are here to help simplify the process for you.

Our team of experienced attorneys can guide you through the estate planning process and help you create a plan that meets your unique needs and goals. Don’t leave the future of your assets and loved ones to chance. Contact our estate planning law firm today at 602-443-4888 to schedule a consultation and take the first step towards protecting your legacy. Our team is here to provide you with the peace of mind that comes from knowing your affairs are in order.



Founding attorney Paul Deloughery has been an attorney since 1998, became a Certified Family Wealth Advisor. He is also the founder of Sudden Wealth Protection Law.