10 Types of Irrevocable Trusts: Which One Do You Need?

There are 10 main types of irrevocable trusts, each designed for a specific legal or financial purpose — from asset protection and Medicaid planning to estate tax reduction, special needs care, and charitable giving.

An irrevocable trust is not a single product — it's a category of legal structure where you give up the ability to change or revoke the trust in exchange for specific legal benefits. The right type depends entirely on what you're trying to accomplish: protecting assets from creditors, qualifying for Medicaid, reducing estate taxes, or providing for a disabled family member.

Also Read: Unlimited estate planning guides covering all trust types, free for 30 days

The 10 Most Common Types of Irrevocable Trusts

Irrevocable trusts are structured around the specific protection or purpose they serve — each has different tax treatment, control restrictions, and qualifying conditions.

1. Irrevocable Life Insurance Trust (ILIT)

An ILIT holds a life insurance policy outside your taxable estate. When the policy pays out at death, the proceeds go to the trust — not to your estate — meaning they're not subject to federal estate tax. This is one of the most common uses of irrevocable trusts for estates above or near the exemption threshold.

Best for: Families with large life insurance policies who want the death benefit outside the taxable estate.

2. Medicaid Asset Protection Trust (MAPT)

A MAPT shelters a home and other assets from Medicaid's spend-down requirement so you can qualify for Medicaid-funded nursing home care without depleting your estate. Assets must be in the trust for five years before applying for Medicaid (the lookback period). This is the most common irrevocable trust for middle-income families planning for long-term care.

Best for: Homeowners over 55 concerned about nursing home costs ($8,000–$12,000/month in 2026).

3. Special Needs Trust (SNT)

A Special Needs Trust holds assets for a beneficiary with a disability without disqualifying them from government benefits (Medicaid, SSI). Without an SNT, inheriting assets directly would eliminate Medicaid and SSI eligibility immediately upon receipt. The trustee uses the funds to supplement — not replace — government benefits.

Best for: Families with a member who has a permanent disability receiving government benefits.

4. Charitable Remainder Trust (CRT)

A CRT pays income to the grantor (or another named beneficiary) for a fixed period or their lifetime, then donates the remaining assets to a named charity at the end. In exchange, the grantor receives a charitable deduction at creation.

Best for: Charitably inclined individuals who want income during retirement and a tax deduction now.

5. Charitable Lead Trust (CLT)

The inverse of a CRT: income goes to charity first (the "lead" period), and the remainder passes to family beneficiaries at the end. Used to reduce estate and gift taxes while supporting a charitable cause.

Best for: High-net-worth families with charitable goals and estate tax concerns.

6. Intentionally Defective Irrevocable Trust (IDIT)

An IDIT is structured to be "defective" for income tax purposes while still removing assets from the estate. The grantor continues paying income tax on trust earnings (reducing their taxable estate further through tax payments) while the trust appreciates tax-free for beneficiaries. Often used with a sale of assets to the trust. See the deep-dive at Intentionally Defective Irrevocable Trust.

Best for: Business owners and high-net-worth individuals making large asset transfers.

7. Domestic Asset Protection Trust (DAPT)

Available in approximately 20 states (including Nevada, South Dakota, and Delaware), a DAPT allows the grantor to be a permissible beneficiary while still shielding assets from future creditors. Unlike typical irrevocable trusts, the grantor can retain some access to trust distributions at the trustee's discretion. See state-by-state details at Domestic Asset Protection Trust States.

Best for: Business owners, physicians, and high-liability professionals in states that allow DAPTs.

8. Supplemental Needs Trust (Third-Party SNT)

Similar to a first-party SNT, but funded by someone other than the disabled beneficiary (usually a parent or grandparent). When the beneficiary dies, remaining assets pass to other designated beneficiaries rather than to the state — unlike first-party SNTs, which may require Medicaid payback.

Best for: Parents and grandparents planning for a disabled child's long-term financial security.

9. Irrevocable Funeral Trust

A small, specialized irrevocable trust that pre-funds funeral and burial expenses. Under Medicaid rules, a prepaid funeral through an irrevocable funeral trust is an exempt asset — it doesn't count against Medicaid's asset limit. See details at Irrevocable Funeral Trust.

Best for: Anyone planning for Medicaid eligibility who wants to pre-fund funeral costs without those funds counting as assets.

10. Testamentary Trust

A testamentary trust is created inside a will rather than during the grantor's lifetime. It becomes irrevocable upon the grantor's death and is administered through the probate estate. Unlike most irrevocable trusts, a testamentary trust does NOT avoid probate (it is created by the will) — but it does control how assets are managed for beneficiaries after probate closes.

Important: A testamentary trust is irrevocable because it comes into existence only at death, but it differs from the other types above in that it doesn't provide the lifetime planning benefits of living irrevocable trusts.

"Trusts, including irrevocable trusts, can be established during the grantor's lifetime (living trusts) or by a will (testamentary trusts). Each serves different purposes in estate planning." — IRS Publication 559 at IRS.gov

Is a Testamentary Trust Revocable or Irrevocable?

A testamentary trust is irrevocable — it comes into being at the grantor's death through the will, and at that point it cannot be changed. However, while the grantor is alive, they can revise the will (and therefore the testamentary trust terms) at any time, which makes it functionally revocable before death.

This is an important distinction: the trust itself is irrevocable once created, but the will that creates it can be changed at any time while the testator lives. This is why testamentary trusts don't provide Medicaid planning benefits or creditor protection during the grantor's lifetime — those protections require an irrevocable living trust created well before any crisis.

How to Choose the Right Type of Irrevocable Trust

The right type depends on your primary goal — each trust type is optimized for a specific outcome.

"The selection of the appropriate trust structure is one of the most consequential estate planning decisions a family can make — the wrong trust type for a given goal may provide little or no legal benefit while creating unnecessary complexity." — American Bar Association Section of Real Property, Trust and Estate Law at AmericanBar.org

Also Read: See What Estate Planning Books Families Use to Choose the Right Trust

In Short

The 10 most common types of irrevocable trusts each solve a specific problem: MAPTs for Medicaid planning, ILITs for estate tax on life insurance, SNTs for disabled beneficiaries, DAPTs for creditor protection, and charitable trusts for giving with tax benefits. A testamentary trust is technically irrevocable but provides no lifetime protections. Work with an estate planning attorney to match the trust type to your specific goal — mismatching trust type to objective is one of the most expensive estate planning mistakes families make.

What You Also May Want To Know

Is a testamentary trust revocable or irrevocable?

A testamentary trust is irrevocable once it comes into existence at the grantor's death, but while the grantor is alive they can change the will (and therefore the trust terms) at any time. It does not provide the lifetime asset protection benefits of a living irrevocable trust because it doesn't exist — and doesn't protect anything — until after death.

Which type of irrevocable trust is best for Medicaid planning?

The Medicaid Asset Protection Trust (MAPT) is specifically designed for Medicaid planning. It shelters a home and financial assets from Medicaid's spend-down requirements, provided the assets have been in the trust for at least five years before applying for Medicaid. Most other irrevocable trust types do not qualify for Medicaid planning purposes.

Can you have more than one type of irrevocable trust?

Yes. Many families use multiple irrevocable trusts simultaneously for different goals — for example, a MAPT to protect the family home, an ILIT to hold a life insurance policy outside the estate, and a Special Needs Trust for a disabled child. Each trust is a separate legal entity with its own EIN and tax filings.

How much does it cost to set up an irrevocable trust?

Attorney fees range from $1,500 to $5,000 for most standard irrevocable trusts (MAPT, SNT, testamentary). More complex structures — ILITs, charitable trusts, DAPTs — can run $3,000–$10,000 or more depending on the attorney and state. Most attorneys charge a flat fee for trust drafting rather than hourly.

Reviewed and Updated on July 1, 2026 by George Wright