How an irrevocable trust works
You (the grantor) transfer assets to an irrevocable trust managed by a trustee for named beneficiaries.
Modern irrevocable trusts are not as rigid as the name suggests.
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Irrevocable Trust Attorney
An irrevocable trust generally cannot be freely revoked or amended by its creator. Irrevocability alone does not establish estate-tax exclusion or creditor protection; the terms, retained powers, transfers and applicable law matter.
Key Points
- ◆Who it is for: high earners, founders before liquidity, families near or above a federal or state estate tax threshold, and clients planning ahead of future creditor risk rather than a claim that already exists
- ◆What it addresses: federal estate tax, New York estate tax (New Jersey and Ohio impose none), creditor and divorce exposure, and multi-generational transfer — the degree of protection depends on the terms, timing, and applicable law
- ◆Requires giving up control — but trust design can preserve flexibility through trustees, decanting, and trust protectors
- ◆Comes in many forms: ILITs, SLATs, GRATs, dynasty trusts, IDGTs, QPRTs, and asset protection trusts
Common mistakes we fix
Funding an irrevocable trust with assets the grantor still needs access to.
Drafting in a high-tax trust situs (New York, New Jersey) when a friendlier jurisdiction (Delaware, South Dakota, Nevada, Ohio) would have saved state income tax on accumulated trust income.
Ignoring the reciprocal trust doctrine when spouses set up mirror SLATs.
New York, New Jersey & Ohio considerations
New York: a state estate tax cliff at the $7,350,000 basic exclusion (2026) means irrevocable planning matters for many families well below the federal exclusion of $15,000,000 per individual in 2026.
New Jersey: no state estate tax, but the inheritance tax and NJ trust income tax push many families to site irrevocable trusts out of state.
Ohio: no state estate tax and the Ohio Legacy Trust Act allows domestic asset protection trusts — Ohio is one of the better situs choices in the country.
How Legacy Counsel helps
We pick the right structure for the goal (gift-and-grow, estate freeze, asset protection, or generational planning), the right situs for tax and creditor rules, and the right trustee mix.
Frequently Asked
Can I get assets back out of an irrevocable trust?+
Not directly — and that is the point, because the tax and creditor treatment depends on the transfer being complete. Flexibility is built in other ways: trustee discretion, powers of appointment, a trust protector, and decanting under the governing state’s statute.
Will I owe gift tax when I fund one?+
Transfers usually consume part of your lifetime gift and estate exemption (approximately $15M per individual in 2026 under current federal law, subject to change).
Do irrevocable trusts protect against divorce?+
Well-drafted irrevocable trusts can shield assets from a beneficiary's future spouse, but the rules are state-specific and depend on distribution language and trustee discretion.
What is the right situs for my trust?+
It depends on your residency, your beneficiaries’ residency, the asset mix, and how long the trust should last. The variables that usually decide it are state income taxation of trust income, permitted trust duration, the asset-protection statute, and whether a local trustee or administrator is required.
Related
Next step
Talk to Legacy Counsel
Fixed-fee estate planning for clients in New York, New Jersey, and Ohio.
Drew Jacobs is licensed in New York, New Jersey, and Ohio. Nothing on this page constitutes legal advice or an offer to represent you in a jurisdiction in which we are not licensed.
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