When considering estate planning, why might a client choose an irrevocable trust?

Choosing an irrevocable trust is primarily motivated by the desire to protect assets from creditors and to reduce estate taxes. When an individual places assets into an irrevocable trust, they effectively relinquish control over those assets. This transfer has significant benefits: it can shield the assets from potential creditors, as the assets are no longer legally owned by the individual. Additionally, because the assets are removed from the individual's estate, they may also help in reducing the overall estate tax liability upon death.

The nature of an irrevocable trust means that once assets are transferred into it, the terms cannot be easily modified or revoked by the grantor, which is a departure from the flexibility offered by revocable trusts. This lack of access may limit the grantor's control, but it is precisely this relinquishment that bolsters the asset protection and tax benefits associated with irrevocable trusts. Thus, the primary incentive for establishing such a trust is to create a more favorable financial and legal environment for the grantor's beneficiaries while ensuring that estate planning objectives are met.