I recommend an irrevocable trust if you:
- Have some creditor issues
- Have potential liabilities out there
- Have a spouse that you don’t completely trust
- Have children you don’t completely trust
There are many ways an irrevocable trust can help, but two big ones are when you can’t completely trust your spouse or your children. For example, when someone passes away with a revocable trust, sometimes the spouse changes it. If you don’t totally trust your spouse, you need to put some real tight regulations in there to ensure things go as you’d intended them to regarding your estate.
Another thing that happens with an irrevocable trust is, especially with men, when their wives pass away first, you have men that are in their 60s, 70s, or 80s who have a lot of money, a lot of wealth. Men, it’s hard for them to be alone. They don’t like it and will often find another woman to live with. As these men remarry or take on girlfriends, the children often worry about what their dad is doing with his wealth and money. And it’s not uncommon for them to start seeing evidence that he’s spending his money in ways he never would have before.
I’ve been involved with a lot of litigation with elderly men who get involved with women who basically take over their lives and their bank accounts and become their power of attorney. In such instances, heirs (children) are typically horrified and try to put a stop to it.
Situations like this highlight how beneficial an irrevocable trust can be. It protects heirs from their parents’ second and third marriages and protects the surviving parent from individuals who may not have the purest motives when entering the relationship.