Bronx Irrevocable Trust Attorney
When it comes to preserving wealth, protecting assets, and planning for the future, irrevocable trusts are a powerful tool. Unlike revocable trusts, which can be altered or revoked during your lifetime, irrevocable trusts offer enhanced legal and tax benefits by permanently transferring ownership of assets out of your name. At Cavallo & Cavallo, our Bronx irrevocable trust attorneys help residents and families strategically use irrevocable trusts as part of a customized estate plan that prioritizes security, control, and legacy.
What Is an Irrevocable Trust?
An irrevocable trust is a legal arrangement in which the person creating the trust (the grantor) transfers assets into the trust, giving up ownership and control over those assets. Once created, the trust generally cannot be modified or revoked without the consent of the beneficiaries or a court.
A third party, known as the trustee, manages the trust assets for the benefit of one or more beneficiaries according to the terms set forth in the trust agreement. Because the assets are no longer considered part of the grantor’s estate, they may be protected from taxes, creditors, and long-term care costs.
Why Use an Irrevocable Trust?
Irrevocable trusts are often used in more advanced estate planning due to the significant advantages they offer. Common goals include:
- Protecting assets from future creditors or lawsuits
- Reducing or eliminating estate taxes
- Qualifying for Medicaid without spending down personal savings
- Controlling how and when assets are distributed to heirs
- Providing for disabled or vulnerable beneficiaries
- Preserving wealth for future generations
- Supporting charitable giving goals
By giving up direct control, the grantor can create powerful protections for both themselves and their loved ones.
Types of Irrevocable Trusts
There are many types of irrevocable trusts, each designed for a specific purpose. At Cavallo & Cavallo, we help clients determine which type best aligns with their goals.
Common irrevocable trusts include:
Irrevocable Life Insurance Trust (ILIT)
Holds life insurance policies outside your taxable estate. Upon death, the proceeds can be used to provide tax-free liquidity for estate taxes or to support heirs.
Medicaid Asset Protection Trust (MAPT)
Helps you qualify for long-term care Medicaid benefits while preserving your home and other assets. Must be created and funded at least five years before applying for Medicaid.
Spousal Lifetime Access Trust (SLAT)
Allows one spouse to transfer assets out of their estate while providing limited access for the benefit of the other spouse, often used to take advantage of gift tax exemptions.
Grantor Retained Annuity Trust (GRAT)
Transfers appreciation on assets to heirs while allowing the grantor to receive fixed payments over a set term, minimizing gift tax.
Special Needs Trust
Preserves inheritance or personal injury proceeds for a disabled individual without disqualifying them from government benefits like SSI or Medicaid.
Charitable Remainder or Lead Trusts
Supports charitable organizations while also providing income or tax benefits to your family or estate.
Each trust must be carefully drafted to comply with state and federal law and to achieve the desired tax and asset protection outcomes.
Irrevocable Trusts and Medicaid Planning
One of the most common uses for an irrevocable trust in the Bronx is Medicaid planning. As the cost of nursing home care continues to rise, more families are using Medicaid Asset Protection Trusts (MAPTs) to preserve assets while still qualifying for long-term care benefits.
Key features of a MAPT:
- Transfers assets into trust to start the five-year Medicaid lookback period
- Keeps income-generating assets producing income for the grantor, if needed
- Prevents the forced sale of a family home or liquidation of savings
- Allows trustees (often adult children) to manage and control assets
- Ensures assets are passed to loved ones instead of used to pay for care
Planning ahead is critical—once someone requires care, it may be too late to take full advantage of this strategy.
Irrevocable Trusts and Estate Taxes
Irrevocable trusts can help reduce or eliminate estate taxes by removing assets from the taxable estate. This is particularly important for high net worth individuals or those with rapidly appreciating assets.
Trust strategies may involve:
- Gifting assets to an irrevocable trust to use lifetime gift tax exemptions
- Using grantor trusts to “freeze” asset values for estate tax purposes
- Leveraging trust income and deductions to reduce taxable income
- Funding trusts with insurance, securities, or real estate expected to grow in value
We work with tax advisors to maximize these benefits while ensuring compliance with New York and federal tax laws.
Trust Funding and Management
Creating a trust is only the first step—properly funding it is critical. Assets must be legally transferred into the trust to activate its protections and benefits. This may include:
- Changing the title on real estate to the trust
- Re-titling investment or bank accounts
- Assigning ownership of life insurance policies
- Transferring business or LLC interests
The trustee is responsible for managing the assets, following the terms of the trust, and filing any required tax returns. We help clients structure their trusts for ease of administration and long-term success.
Frequently Asked Questions About Irrevocable Trusts
Can I still receive income from an irrevocable trust?
Yes. Depending on how the trust is structured, you may receive income from trust assets—especially in Medicaid planning or charitable trusts.
Can I change my mind after creating an irrevocable trust?
Generally no, but some trusts include flexibility through trust protectors, powers of appointment, or built-in modification clauses. Legal options for modifying an irrevocable trust are limited and require careful review.
Will an irrevocable trust protect assets from creditors?
Yes. Once assets are transferred into an irrevocable trust, they are typically beyond the reach of your personal creditors, assuming the trust was not created to avoid known debts.
Is an irrevocable trust private?
Yes. Unlike a will, which becomes public during probate, a trust remains private, offering confidentiality regarding your assets and beneficiaries.
Do I still pay taxes on trust assets?
It depends. Some irrevocable trusts are structured as “grantor trusts,” where the grantor still pays income tax. Others are separate taxable entities with their own tax filings.
How long does an irrevocable trust last?
It depends on the trust’s terms. Some are created to last for a specific number of years or until a beneficiary reaches a milestone, while others—such as dynasty trusts—can last for generations.
Serving Throughout The Bronx
- Riverdale
- Spuyten Duyvil
- Pelham Bay
- Morris Park
- Throggs Neck
- Kingsbridge
- Woodlawn
- Parkchester
- Bedford Park
- Fordham
How Cavallo & Cavallo Can Help
At Cavallo & Cavallo, we’ve been helping Bronx families protect their assets and secure their futures for over 30 years. We bring deep experience in elder law, estate planning, and trust creation, with a personalized approach that respects your goals and values.
Our irrevocable trust services include:
- Designing and drafting custom irrevocable trust agreements
- Medicaid trust planning and long-term care coordination
- Tax-efficient gifting and estate tax reduction strategies
- Trust funding assistance and asset transfers
- Trustee support and compliance guidance
- Integrating irrevocable trusts into your broader estate plan
We work with your financial advisors and accountants to create a cohesive plan that protects what matters most.
Talk to a Bronx Estate Planning Attorney About Irrevocable Trusts
Whether you’re planning for Medicaid eligibility, tax reduction, or long-term family security, an irrevocable trust can provide the protection and flexibility you need. Contact Cavallo & Cavallo today to speak with an experienced Bronx estate planning attorney and start building a plan that keeps your legacy intact and your loved ones secure.
