There are several factors that distinguish a Revocable Trust from an Irrevocable Trust. The first is the overall purpose of the Trust. The primary purpose of the Revocable Trust is avoiding probate for the Grantor’s estate. The primary purpose of the Irrevocable Trust is to protect and control the Grantor’s assets during life and at death. In the long-term care context, “protect” refers to positioning assets so that they are not subject to the financial qualification rules for government benefits.
These various purposes are accomplished by having the Grantor hold different positions in the Trust relationship. The Grantor is often both the Trustee and lifetime Beneficiary of a Revocable Trust. Probate is avoided because the Grantor holds legal title as Trustee and not as an individual. The Grantor retains possession and control of the Trust assets because he holds equitable title.
In the Irrevocable Trust arrangement, the Grantor is the person who transfers assets into the name of the Trust. For government benefit purposes, the Grantor is never a Trustee. Depending on the nature of the asset, the Grantor may hold equitable title as the lifetime Beneficiary. It is quite common for a third party to hold equitable title as the lifetime Beneficiary. The point of this type of Trust is to separate the Grantor from ownership of the Trust assets.
The third factor is whether the Grantor can take assets out of the name of the Trust. For a Trust to function, it must own assets. The Grantor funds the Trust with assets by gifting them to it. If the gift is incomplete (Grantor can take the assets back), then the Trust is Revocable. If the gift is completed (Grantor cannot take the assets back), then the Trust is Irrevocable. The Trust language must make the distinction with particularity.