An irrevocable trust is a permanent legal arrangement that removes assets from your personal ownership — and from your taxable estate. Once created, it generally cannot be modified or revoked without court approval or the consent of all beneficiaries. In exchange for giving up control, you gain powerful benefits: creditor protection, estate tax reduction, Medicaid planning, and asset preservation across generations.
Texas Legal Giants structures irrevocable trusts for Houston families with specific planning goals — Medicaid asset protection, special needs planning, life insurance ownership, and estate tax mitigation. Free consultation — call (346) 971-7333.
Why Houston Families Choose Texas Legal Giants for Irrevocable Trusts
Goal-Specific Drafting
Irrevocable trusts are not one-size-fits-all. Whether you need a Medicaid asset protection trust, an ILIT for life insurance, a SLAT for spousal access, or a charitable trust, we draft for your specific goal — not a generic template.
Medicaid Planning Experience
We understand the five-year Medicaid look-back period, exempt asset rules, and countable asset limits under Texas Medicaid. Proper timing and structuring are critical — mistakes can disqualify benefits or trigger unnecessary penalties.
Tax Coordination
We coordinate irrevocable trust planning with your accountant for income tax, gift tax, and estate tax implications. An irrevocable trust that reduces estate taxes but creates unexpected income tax problems is not a win.
Trustee Selection Guidance
The trustee of an irrevocable trust cannot be you — and the wrong choice can create tax problems or family conflict. We help you evaluate individual vs. corporate trustee options.
Beneficiary Spendthrift Protections
We include spendthrift provisions that protect trust assets from beneficiaries’ creditors, divorcing spouses, and financial mismanagement — preserving family wealth across generations.
Clear Explanation of Trade-Offs
Irrevocable trust planning involves real trade-offs — you give up control and flexibility. We explain every consequence in plain language before you commit.
When Does an Irrevocable Trust Make Sense?
An irrevocable trust is appropriate when you have a specific planning goal that requires removing assets from your estate or personal ownership: reducing estate taxes on a large estate, protecting assets from creditors or Medicaid spend-down requirements, holding life insurance outside your estate, or providing for a beneficiary with special needs without disqualifying government benefits.
If your primary goal is simply avoiding probate and maintaining privacy, a revocable living trust achieves that without the loss of control that comes with an irrevocable arrangement. The right choice depends entirely on your specific situation — an estate planning attorney can help you evaluate which structure fits your goals.
Medicaid Asset Protection Trust
Removes countable assets from your estate for Medicaid eligibility purposes while preserving them for heirs. Must be created at least five years before applying for Medicaid (the look-back period). The grantor cannot be a beneficiary. One of the most common irrevocable trusts for Texas families planning for long-term care costs.
Irrevocable Life Insurance Trust (ILIT)
Holds a life insurance policy outside your taxable estate. The death benefit passes to beneficiaries estate-tax-free. You cannot be the trustee. Premiums are paid by gifting funds to the trust, using the annual gift tax exclusion. Requires careful Crummey notice compliance.
Special Needs Trust (SNT)
Holds assets for a disabled beneficiary without disqualifying them from SSI or Medicaid. A third-party SNT (funded by family) does not require Medicaid payback at death. A first-party SNT (funded with the beneficiary’s own assets) does. Both require specialized drafting.
Key Benefits of Irrevocable Trust Planning
Estate Tax Reduction
Assets transferred to an irrevocable trust are removed from your taxable estate. For estates above the federal exemption ($13.6M in 2024, but potentially much lower after 2025 sunset), this can reduce estate taxes by 40 cents on every dollar above the exemption.
Creditor and Lawsuit Protection
Once assets are transferred to an irrevocable trust (with the required time passing), they are generally no longer reachable by your personal creditors. This is particularly valuable for business owners, professionals, and others with liability exposure.
Medicaid Eligibility Planning
By transferring countable assets to a Medicaid Asset Protection Trust at least five years before applying for benefits, you may preserve those assets for heirs while qualifying for Medicaid long-term care coverage — which can pay for nursing home care costing $60,000–$100,000+ per year in Texas.
Multigenerational Wealth Preservation
A dynasty trust can hold assets for multiple generations, with spendthrift provisions protecting each generation’s inherited share from creditors and divorcing spouses.
Special Needs Protection
A properly structured special needs trust allows a disabled beneficiary to receive supplemental funds — for education, recreation, technology, and quality of life — without losing SSI or Medicaid eligibility.
Life Insurance Outside Your Estate
An ILIT owns a life insurance policy, keeping the death benefit out of your taxable estate while still making the proceeds available to your beneficiaries.
Have a Specific Asset Protection or Tax Planning Goal?
Irrevocable trusts are powerful tools when used correctly — and potentially problematic when used for the wrong situation. Texas Legal Giants evaluates your goals, explains your options, and drafts irrevocable trust structures designed to achieve real results. Free, confidential consultation.
Frequently Asked Questions — Houston Irrevocable Trust Attorney
Common questions about irrevocable trust planning in Texas.
Generally no — that is what makes it irrevocable. However, Texas Trust Code §112.054 allows a court to modify or terminate an irrevocable trust under certain circumstances (uneconomical administration, changed circumstances, or if modification furthers the trust’s purpose). Texas also recognizes decanting — pouring assets from an old irrevocable trust into a new one with more favorable terms — under Chapter 112.
An irrevocable trust is a separate taxpayer with its own EIN. It files a Form 1041 federal fiduciary income tax return. Undistributed trust income is taxed at compressed trust income tax rates (the top 37% bracket starts at just $15,200 in 2024). Distributed income passes through to beneficiaries at their individual rates. Estate planning should account for this.
You generally cannot serve as trustee of your own irrevocable trust without destroying the estate tax and asset protection benefits. An independent trustee — a trusted family member, friend, or corporate trustee — must manage the trust. The right choice depends on your goals and family dynamics.
Texas Medicaid reviews asset transfers made within five years before the date of the Medicaid application. Transfers to an irrevocable trust within this five-year window may trigger a period of Medicaid ineligibility proportional to the value transferred. Planning must begin at least five years before anticipated need.
Certain irrevocable trust structures — such as a Spousal Lifetime Access Trust (SLAT) — allow a spouse to be a beneficiary while removing assets from the grantor’s taxable estate. However, if the grantor also benefits indirectly through the spouse, there are gift and estate tax risks. These structures require careful drafting and should not be DIY’d.
Sources & Legal References
BJ Kemp — Your Houston Estate Planning Attorney
Texas State Bar #24116608 · Texas Legal Giants · Houston, TX
BJ Kemp structures irrevocable trusts for Houston families with specific planning goals — Medicaid asset protection, estate tax reduction, special needs planning, and life insurance trusts — with clear explanation of every trade-off before commitment. Free consultation — call (346) 971-7333. No fee unless we win your case.