Why Would Someone Want an Irrevocable Trust in Arizona?

Use an irrevocable trust when protection, eligibility or tax control matters more than day to day flexibility.

The short answer

An irrevocable trust is “locked in” on purpose, which can create protections a revocable living trust cannot.

A revocable living trust avoids probate and keeps you in control. An irrevocable trust gives up control, by design. That tradeoff can protect a child’s inheritance, support ALTCS eligibility, preserve benefits for a loved one with disabilities, or manage federal tax and legacy goals. If you want a quick contrast, see our revocable vs irrevocable FAQ.

Reason 1: Protect a beneficiary’s inheritance

Well drafted irrevocable trusts can shield a beneficiary’s share from many creditor claims and divorces.

If you worry about lawsuits, divorce or overspending, keep assets in trust for that beneficiary. Add a spendthrift clause and give an independent trustee discretion over distributions. Arizona recognizes spendthrift provisions that restrict a beneficiary’s ability to transfer their interest, which limits what most creditors can reach. See A.R.S. § 14-10502.

• Keep distributions discretionary, not automatic.
• Use milestones or health, education, maintenance and support standards.
• Consider a professional or independent trustee for tough calls.

Reason 2: Know the limits if you are the settlor

Arizona limits protection for “self settled” trusts. Assets you place in your own trust can still be reachable.

Arizona draws a bright line: transferring your property to a trust you created for yourself does not by itself block your creditors. Property in a revocable trust is reachable during your life, and certain claims can still reach a formerly revocable trust after death if the probate estate is short. See A.R.S. § 14-10505.

Reason 3: Medicaid (ALTCS) eligibility planning

Arizona recognizes specific irrevocable “Special Treatment Trusts” that can support ALTCS long term care eligibility.

ALTCS has strict income and resource limits. Certain irrevocable trusts, when drafted and administered exactly as the rules require, can help someone qualify and then repay AHCCCS from what remains at death. Arizona’s policy explains trust types, funding, allowable distributions and reporting. See AHCCCS ALTCS Special Treatment Trusts.

• Common tools include income only trusts, pooled trusts and first party disability trusts.
• Trustee duties and reporting are strict. Mistakes can make assets “countable.”
• Coordinate this with updates to your powers of attorney and beneficiary designations.

Reason 4: Special needs planning that preserves benefits

A special needs trust can pay for quality of life items without disrupting needs based benefits.

Instead of leaving money to a loved one outright, leave it to a special needs trust. The trustee pays for therapies, transportation, social support and other supplemental needs. Pair the trust with updated beneficiary designations so funds flow correctly. For related ideas, see how purpose built trusts work and our trust funding guide.

Reason 5: Federal tax and legacy control

Irrevocable trusts can remove growth from your taxable estate and control how wealth passes across generations.

Families often use irrevocable life insurance trusts, charitable trusts or multigenerational “dynasty” provisions to manage taxes and guide future use. Keep your CPA in the loop for gift reporting and trust income tax returns. If probate avoidance is your only goal, start with trusts vs wills and a funded revocable plan.

Quick compare: revocable vs irrevocable

Revocable is flexible and private. Irrevocable is locked and protective.

• Revocable living trust: avoids probate, easy to change, assets remain effectively yours while you are alive. See Living Trusts Explained.
• Irrevocable trust: hard to change, you give up control, potential protections for beneficiaries, and eligibility tools for ALTCS.

Administration and smart drafting

Good drafting and clean administration make the protections work in real life.

• Pick a capable trustee and name a backup.
• Use clear distribution standards and spendthrift language.
• Keep funding up to date. Follow our step by step funding guide.
• Review beneficiary designations on accounts and policies.
• Revisit documents after major life changes and every few years.

Is an irrevocable trust right for you?

Use one when the benefit clearly outweighs the loss of flexibility.

• You want long term protection for a child’s inheritance.
• You or a loved one needs ALTCS planning with strict compliance.
• You want to guide wealth across generations with guardrails.

If flexibility is your priority, a revocable plan may fit better. Start with our wills overview, then compare trusts vs wills and build a solid incapacity plan.

Key Arizona sources used

We rely on official Arizona statutes and agency policy.

• Spendthrift protection for beneficiaries: A.R.S. § 14-10502
• Limits on self settled protection: A.R.S. § 14-10505
• ALTCS Special Treatment Trusts policy: AHCCCS Policy 803.E