Many clients have preconceived notions about irrevocable trusts—that they can be rigid and inflexible as their name seems to imply, yet irrevocable trusts come in several distinct flavors that can be customized for very specific purposes. Below is a description of the top seven types of irrevocable trusts that we put in place for clients and the objectives for which they are used. For some clients a single scoop trust standing alone might be sufficient. For other clients, a sundae of several trusts working in parallel is appropriate to achieve their precise planning goals. Read on to learn more about irrevocable trusts and how they might be of service to your family
regardless of your net worth level. 

1. Medicaid Asset Protection Trust

A Medicaid Asset Protection Trust (MAPT) is a useful estate planning tool that can protect assets—like your home—from being included as available assets when determining Medicaid eligibility. In New Hampshire and New York, for example, if you transfer your home into a MAPT and five years pass, it’s shielded from Medicaid recovery. This means the state can’t place a lien on it or force its sale to cover long-term care costs. Think of your home as a bowl of ice cream—placing it in a MAPT is like putting it in a secure freezer: it stays protected. While you can’t dip into it directly, you can still sell the home and use the proceeds to buy another, which remains protected within the trust. Any income the trust assets generate, such as rent or interest, can still be paid to you for your enjoyment. To keep the structure valid, the trust must be managed by someone other than you—usually a trusted family member or a professional. As a bonus, assets held in the trust bypass probate entirely, allowing for a smoother and more efficient transfer to your beneficiaries. It’s a smart move for preserving both your legacy and your peace of mind.

2. Non-Grantor Trust 

Estate taxes can take a significant bite out of your legacy if your assets exceed exemption limits—and the thresholds vary widely between states. The current federal estate tax exemption is $13.9 million per individual, but states may impose their own limits: Massachusetts is $2 million, New York is $7.16 million and Connecticut is $13.85 million. If your estate exceeds these amounts, your family may be subject to steep estate taxes. Additionally, many states apply look-back periods that can affect how and when asset transfers are counted for tax purposes. That’s where a non-grantor trust comes in. When you place assets into a non-grantor trust, you’re not just shifting management—you’re removing them entirely from your taxable estate. The trust becomes a separate taxable entity, which can create income tax advantages and significantly reduce estate tax exposure. These trusts are ideal for assets you can live without but still want to protect. It’s important to be comfortable relinquishing control, because once the assets are in the trust, you can’t access or reclaim them without getting your hands sticky. With the right ingredients and careful planning, a non-grantor trust offers significant tax savings to high-net worth individuals.

3. Irrevocable Life Insurance Trust

By placing your life insurance policy into an Irrevocable Life Insurance Trust (ILIT), it’s kept outside of your taxable estate: the death benefits your beneficiaries receive will not be subject to either state or federal estate tax. For many individuals, receiving an insurance payout could push their estate over the estate tax limit, so an ILIT is a valuable tool for keeping that payout intact for your beneficiaries. While life insurance is a key component of a broader strategy, managing it through an ILIT ensures it delivers its full value to supplement the remainder of your estate plan.

4. Charitable Trusts

A charitable trust is a lasting commitment: once it is established, the assets placed in it are legally set aside for two sets of beneficiaries: charity and individual. Charitable trusts come in many flavors. One option, a charitable lead trust, provides income to charity for a specified period up front, after which the remaining assets can be distributed to the donor’s heirs or revert to the donor. On the other hand, a charitable remainder trust works in reverse: it allows the donor (or beneficiaries) to receive income for a set period, with the remainder going to charity. These trusts can be especially valuable tools for charitably inclined individuals seeking to reduce taxable income, avoid capital gains taxes on appreciated assets, or minimize estate taxes. Though they require legal guidance to set up, charitable trusts tend to be more cost-effective than private foundations for long-term giving. Much like sharing that special sweet treat, these trusts leave you with a sense of fulfilment and lasting impact for causes you care about.

5. Spousal Lifetime Access Trust 

A Spousal Lifetime Access Trust (SLAT) is a useful estate planning tool that allows one spouse to transfer assets to an irrevocable trust for the benefit of the other, removing those assets from his or her taxable estate while still preserving some indirect access. It’s particularly valuable for those who want to take advantage of the current elevated gift tax exemption and also for those looking to avoid those federal and state estate tax thresholds. A SLAT offers a mix of immediate flexibility and long-term benefits. It helps reduce estate taxes by keeping future asset growth outside both spouses’ estates, while also offering protection from creditors’ claims. Although the donor gives up direct control, certain planning tools, such as trust loans or discretionary distributions to the beneficiary spouse or children, provide practical access to the funds. With careful structuring, a SLAT becomes a powerful tool in a comprehensive wealth transfer and asset protection strategy.

6. Special Needs Trust 

A Special Needs Trust (SNT) is an estate planning tool designed to support individuals who rely on government assistance programs like Supplemental Security Income (SSI) and Medicaid, which have strict income and asset limits. An SNT allows a person to receive financial support or an inheritance without jeopardizing eligibility for these essential benefits. For example, parents can establish an SNT for a child, placing the inheritance in the trust so the child remains eligible for aid. Think of it like a perfect scoop of cookie dough ice cream—where the vanilla base represents the steady, reliable support of the trust, and the cookie dough chunks symbolize the added flexibility for expenses like entertainment and personal needs. An SNT requires careful management to ensure the funds are used appropriately. The trust cannot cover basic living costs like healthcare, food or housing and direct cash payments to the beneficiary are not allowed. Because of these rules, creating an SNT involves thoughtful planning around how funds will be used to support the beneficiary’s quality of life. 

7. Special Purpose Trust

A Special Purpose Trust is an estate planning tool designed to accomplish specific goals—like preserving a cherished family vacation home, caring for a beloved pet, or providing for an impoverished family member—by ensuring these assets or intentions are handled with long-term stability. While these trusts aren’t always the default choice, they’re incredibly effective when aligned with a clear objective, such as safeguarding a family legacy or securing future stability for a loved one. When done right, a Special Purpose Trust offers lasting peace of mind and ensures your specific wishes are honored without unnecessary legal obstacles.