Quick Summary

This article explains how to set up an irrevocable trust to protect your wealth, minimize taxes, and ensure a smooth transfer of assets. It covers defining your goals, choosing the right jurisdiction, selecting a trustee, funding the trust, and drafting a solid trust agreement. Visit the Blake Harris Law Blog to learn more about protecting your assets.

Considering Setting Up an Irrevocable Trust?

Are you concerned about safeguarding your wealth and ensuring your assets are protected for future generations? Setting up an irrevocable trust can provide peace of mind by shielding your property from lawsuits, creditors, and other potential threats. 

In this Blake Harris Law article, we are going to explain how to set up an irrevocable trust with a simple step-by-step guide.

But First…

Why Listen to Us? 

At Blake Harris Law, we specialize exclusively in offshore asset protection, backed by a team of experienced attorneys and paralegals dedicated to safeguarding your wealth. With a global network of trusted partners and a proven track record of client satisfaction, you can trust our step-by-step guide to help you set up an irrevocable trust with confidence.

What Is an Irrevocable Trust?

An irrevocable trust is a legal agreement that permanently transfers assets out of the grantor’s control. Once created, it cannot be changed or revoked without beneficiary approval. It is a powerful option for asset protection, tax benefits, and estate planning.

How It Works

A well-structured irrevocable trust relies on three key players:

  • Grantor: Creates the trust and transfers assets like cryptocurrency, real estate, and business interests into it.
  • Trustee: Manages the trust, ensures legal compliance, and protects assets.
  • Beneficiaries: Receive distributions based on the trust’s terms, securing long-term financial stability.

See our guide to the difference between revocable trust and irrevocable trust.

Types of Irrevocable Trusts

The most common type is the Asset Protection Trust, which shields wealth from lawsuits, creditors, and divorce. Other types include:

Why Set Up Irrevocable Trust?

  • Asset Protection: Assets placed in an irrevocable trust are no longer personally owned, shielding them from creditors, lawsuits, and financial risks.
  • Tax Advantages: By removing assets from the grantor’s taxable estate, irrevocable trusts may reduce estate taxes in some circumstances, preserving more wealth for beneficiaries.
  • Government Benefit Eligibility: Irrevocable trusts allow individuals with disabilities to retain assets without jeopardizing eligibility for government assistance programs.
  • Controlled Asset Distribution: Grantors can set specific terms and conditions for when and how beneficiaries receive assets, ensuring responsible financial management. At Blake Harris Law, we help clients design customized trust structures to meet their unique distribution goals.
  • Safeguarding Complex Assets: Ideal for protecting high-value or complex assets, including cryptocurrency, from legal risks.

Steps to Set Up a Fully Functional Irrevocable Trust

Step 1: Define Your Goals

There is a lot you can do with an irrevocable trust, but getting the most out of it depends on having clear objectives. Therefore, before you set one up, define what you need to protect and why. Different goals require different trust structures, so understanding your specific needs is very important.  

You should consider an irrevocable trust if you:

  • Have Significant Assets: Irrevocable trusts can protect cryptocurrency, real estate, business interests, or investments from future risks.
  • Want Lawsuit Protection: Are you a doctor, business owner, or a high-risk professional? An irrevocable trust can shield your wealth from creditors, lawsuits, and divorce.
  • Need Tax Planning: You can establish an irrevocable trust to reduce estate, income, or capital gains taxes by removing assets from your taxable estate.
  • Plan to Transfer Wealth: If estate planning is your goal, you can ensure beneficiaries receive assets without probate delays or legal disputes with a well-structured irrevocable trust.
  • Wish to Support Charitable Causes: Charitable irrevocable trusts allow you to donate assets to a cause you care about while receiving tax benefits and maintaining some control over the distributions.

If asset protection is your priority, a jurisdiction like the Cook Islands, Nevis, or Belize may be ideal. If unsure where to start, our team at Blake Harris Law helps clients clarify their goals and select the best trust structure for long-term security.

Step 2: Choose the Right Jurisdiction

Once you are certain you need an irrevocable trust, the next step is to choose where to establish it. Jurisdiction matters because local laws dictate the strength of your trust’s asset protection, privacy, and tax benefits. Some jurisdictions offer stronger safeguards than others, making this a critical decision.

Here are some factors to consider when choosing a jurisdiction: 

  • Legal Protections: Strong jurisdictions shield assets from creditors, lawsuits, and forced repatriation. Some require claimants to file lawsuits within the jurisdiction, making legal challenges costly and difficult.
  • Privacy: Certain jurisdictions have strict confidentiality laws, preventing public disclosure of trust details.
  • Trustee Requirements: Some jurisdictions mandate a local trustee, while others allow more flexibility.
  • Statute of Limitations on Claims: A shorter statute limits the time creditors have to challenge the trust.
  • Tax Treatment: Offshore trusts can provide tax-neutral benefits, but U.S. tax laws still apply to U.S. citizens.

For high-net-worth individuals, Cook Islands, Nevis, and Belize stand out for exceptional asset protection laws. These trust jurisdictions make it nearly impossible for creditors to access trust assets due to high legal burdens and strict filing requirements. 

Step 3: Select a Trustee 

The trustee plays a critical role in an irrevocable trust. They control and manage assets, ensure compliance with legal requirements, and execute trust terms. Getting this decision right is key. The wrong trustee can undermine asset protection and create legal risks.

Here is what to look for in a Trustee:

  • Experience and Knowledge: The trustee must understand trust laws, asset management, and fiduciary responsibilities.
  • Impartiality: A neutral trustee prevents conflicts of interest and ensures assets are managed in the beneficiaries’ best interests.
  • Trustworthiness: Since the grantor gives up control, selecting a reliable and ethical trustee is essential.
  • Jurisdiction Requirements: Some jurisdictions require a local trustee for maximum legal protection.

At Blake Harris Law, we help clients evaluate trustee options, ensuring compliance with jurisdictional laws while maintaining control over trust administration. 

Step 4: Fund the Trust

An irrevocable trust only works when properly funded. Transferring assets removes them from your ownership, securing legal protection, tax benefits, and estate planning advantages. Failing to fund the trust leaves assets exposed to lawsuits, creditors, and probate.

What Assets go into an irrevocable Trust?

  • Cryptocurrency: You can transfer Bitcoin, Ethereum, and other digital assets for protection and estate planning.
  • Real Estate: Deed properties into the trust as a step towardsto shielding them from creditors and probate.
  • Business Interests: Reassign ownership in LLCs, corporations, and partnerships to keep them secure.
  • Investment Accounts: Move stocks, bonds, and private equity into the trust for long-term wealth preservation.
  • Life Insurance Policies: Shift policies into an Irrevocable Life Insurance Trust (ILIT) to reduce estate taxes.

See our article on –  Can you add assets to an irrevocable trust?

Proper funding locks in asset protection, stops future claims, and keeps wealth secure for beneficiaries. You must complete legal paperwork like deeds, assignment agreements, and account retitling to fund the trust. 

Step 5: Draft and Execute the Trust Agreement

Your trust agreement is the backbone of your irrevocable trust. This document outlines the trustee’s responsibilities, beneficiary rights, and asset management rules. Considering its importance, a weak or vague agreement can expose assets to legal risks and limit the trust’s effectiveness.

An effective trust agreement usually includes: 

  • Grantor’s Intent: Spell out why you created the trust and what you want it to accomplish.
  • Trustee’s Responsibilities: Define what the trustee can and cannot do, including managing and distributing assets.
  • Beneficiary Terms: Detail who gets what, under what conditions, and how to protect distributions from creditors.
  • Asset Management: Set rules for handling cryptocurrency, real estate, and business interests in the trust.
  • Jurisdictional Protections: Leverage laws from Cook Islands, Nevis, or Belize for stronger security.
  • Periodic Reviews and Updates: Laws and personal circumstances can change over time. Periodically reviewing and updating the trust ensures it remains compliant and aligned with your goals.

A trust is not active until properly signed, notarized, and executed under the right jurisdiction. The trustee must be officially appointed, and assets must be transferred into the trust. 

Work With Experts to Set Up Your Irrevocable Trust  

Setting up an irrevocable trust is a powerful way to protect your wealth, minimize taxes, and ensure a smooth transfer of assets to your loved ones. By taking the right steps, you can achieve long-term financial security and peace of mind.

At Blake Harris Law, we specialize in creating tailored irrevocable trusts that align with your unique goals. Our experienced team guides you through each step, from defining your objectives to choosing the best jurisdiction and drafting a rock-solid trust agreement. 

Ready to safeguard your legacy? Contact us today to schedule a consultation.