Irrevocable Income-Only Trust - IIOT

DEFINITION of 'Irrevocable Income-Only Trust - IIOT'

A type of living trust often used for Medicaid planning. It protects assets from being sold to pay for nursing home and other long-term care expenses, so that the assets can be passed on to beneficiaries. Once assets are transferred into the trust, certain restrictions are placed on their use. However, the grantor retains the right to any income generated by the trust assets. The grantor also has the right to use, live in and sell any real estate held in the trust, as well as buy another property with the proceeds of any sale.

BREAKING DOWN 'Irrevocable Income-Only Trust - IIOT'

The trust agreement should describe the trust name, trust property, appointment of trustee, appointment of trust protector, power over trust property, when beneficiaries may appoint a successor trust protector, fees and expenses due to the trust protector, the purpose of the trust and the management and distribution of the trust during the grantor's lifetime. By requiring such detail, IIOTs leave little room for doubt and are nearly impossible to break as long as the trustor was in his or her right mind at the time of the trusts creation.

RELATED TERMS
  1. Grantor Trust Rules

    Guidelines that state a trust is considered to be a grantor trust ...
  2. Active Trust

    A trust where the trustee is held accountable for additional ...
  3. Naked Trust

    A straightforward type of trust into which a trustor transfers ...
  4. Credit Shelter Trust - CST

    A type of trust that allows a married investor to avoid estate ...
  5. Trust

    A fiduciary relationship in which one party, known as a trustor, ...
  6. Bare Trust

    A basic trust in which the beneficiary has the absolute right ...
Related Articles
  1. Retirement

    Estate Planning: Introduction To Trusts

    by Cathy Pareto, CFP®, AIF® (Contact Author | Biography) A trust is an agreement that describes how assets will be managed and held for the benefit of another person. There are many ...
  2. Products and Investments

    Irrevocable Trusts: New Trends You Need to Know

    Several improvements and additional provisions have been added to irrevocable trusts in recent years making them considerably more versatile than before.
  3. Retirement

    Pick The Perfect Trust

    Trusts are an estate plan's anchor, but the terminology can be confusing. We cut through the clutter.
  4. Your Clients

    Advisors: Tips for When to Employ Living Trusts

    Revocable living trusts accomplish estate planning objectives that aren't possible with a will. Here are some of the cases that show when to use a trust.
  5. Retirement

    Surprising Ways a Trust Could Help Your Family

    Everything you always wanted to know about setting up trusts, in handy glossary form.
  6. Retirement

    How To Set Up A Trust Fund In Australia

    No, they're not just for the super-rich. But you need to know the rules.
  7. Your Clients

    When to Trust a Revocable Trust

    Unsure of how your assets will be dispersed once you're gone? Here's how setting up a revocable trust while you're here can be a big benefit.
  8. Retirement

    How To Set Up A Trust Fund In The U.K.

    A guide to the whys and wherefores of setting up this most versatile of estate-planning instruments in the United Kingdom.
  9. Retirement

    Establishing A Revocable Living Trust

    This arrangement allows you to have more control over your estate - both before and after your death.
  10. Personal Finance

    Surprising Uses for Trust Funds

    Here are five common situations where a trust fund makes financial sense.
RELATED FAQS
  1. How does the trust maker transfer funds into a revocable trust?

    Learn how revocable living trusts are established, how the trust maker transfers funds into the trust, and the advantages ... Read Answer >>
  2. What is the difference between a revocable trust and an irrevocable trust?

    Find out more about irrevocable trusts, revocable trusts and the main differences between them. Read Answer >>
  3. What is the difference between revocable and irrevocable intervivos trusts?

    Learn what an inter-vivos trust is, the difference between an irrevocable and a revocable inter-vivos trust, and why it is ... Read Answer >>
  4. What is the difference between a revocable trust and a living trust?

    Learn how a revocable trust and living trust are two terms used to describe the same thing and what the key provisions are ... Read Answer >>
  5. How exactly does one go about revoking a revocable trust?

    Learn more about revocable trusts, including the necessary legal procedure that a grantor must go through to revoke a revocable ... Read Answer >>
  6. How are trust fund earnings taxed?

    Trust fund earnings that are distributed are paid by the beneficiary. The trust pays taxes on retained earnings and principal ... Read Answer >>
Hot Definitions
  1. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  2. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  3. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  4. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  5. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  6. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
Trading Center