Some people harbor misconceptions about trusts. One of them is the idea that you can never dissolve a trust after it has been created, and you lose access to the resources. This is not entirely true, and we will explain the details here.
Irrevocable Trusts
The confusion comes from the fact that there are different types of trusts. Indeed, some of them are irrevocable. As the name would suggest, you cannot revoke this type of trust, though there are some limited exceptions.
If you establish an irrevocable trust, you cannot act as the trustee, which is the trust administrator. Because of the fact that you retain the right of revocation and you do not have the ability to control the assets in the trust, you are surrendering incidents of ownership.
Medicaid Eligibility
This is a good thing if you want to accomplish certain objectives, including Medicaid eligibility. The program is important for many elders because it will pay for a stay in a nursing home. There is also a Medicaid waiver that will cover in-home custodial care.
Medicare does not cover long-term care, and it is very expensive, so Medicaid eligibility can preserve your legacy.
You cannot qualify for Medicaid if you have more than $2,000 in countable assets in your own name. As a response, you can convey resources into an irrevocable, income-only Medicaid trust.
Until and unless you apply for Medicaid, you could accept distributions of the trust’s earnings, but you would not be able to touch the principal. If you apply for Medicaid at least five years after you fund the trust, the principal will not count.
Tax Efficiency
If you convey assets into an irrevocable trust, they would no longer be part of your estate for estate tax purposes. There are certain types of irrevocable trusts that facilitate transfers at a tax discount.
This tax is applicable on the portion of an estate that exceeds the exclusion, which is $12.93 million in 2023.
These are two of the reasons why people use irrevocable trusts, and there are others that we will look at in future posts.
Revocable Living Trust
The revocable living trust is a very different type of trust. If you establish a living trust, you would act as the trustee, and as the name would indicate, you can revoke the trust at any time.
Since you would be retaining control of the assets, they would count if you apply for Medicaid, and they would be part of your estate for tax purposes. They would also be available to a litigant if you are sued for some reason.
Why would you use an revocable trust if it will not satisfy these objectives? One of the major benefits is the avoidance of probate, which is a legal process that would be necessary if you use a will to state your final wishes.
No inheritances are distributed while the estate is being probated, and it will usually take about eight months at a minimum. Probate expenses eat away at the value of the estate, and anyone interested party can access the records, so there is a loss of privacy.
The administration of a living trust is not subject to probate, so these negatives do not enter the picture. Plus, the estate administration is streamlined because of the consolidation of asset ownership.
Spendthrift Protections
You may be concerned about the money management capabilities of someone on your inheritance list. They will receive a lump sum inheritance if you use a will to facilitate the transfer.
On the other hand, if you utilize a revocable living trust, you can instruct the trustee to distribute assets in any way that you choose. The trust can remain intact for an extended period of time, and the beneficiary could receive limited incremental distributions.
After your passing, the trust would be irrevocable, and the beneficiary would not have access to the principal. This would also apply to their creditors, so there would be asset protection.
Schedule a Consultation Today!
As you can see, you have options when you are planning your estate. The ideal way to proceed will depend on the circumstances, and we can make recommendations after we gain an understanding of your situation and your objectives.
If you are ready to get started, you can schedule a consultation at our Oklahoma estate planning office by calling us at 405-843-6100. You can also reach our Tulsa location at 918-615-2700. There is also a contact form on this site you can use if you would rather send us a message.
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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- Aging in Place: A Medicaid Waiver Can Fill the Gap - October 6, 2026
- Does Every Estate Go Through Probate? - September 29, 2026
