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Irrevocable trusts are designed to be permanent. That’s what makes them such an effective tool for asset protection and long-term tax planning. But “permanent” doesn’t necessarily mean “unchangeable.” As your family evolves and tax laws shift, even an irrevocable trust may need a fresh look to ensure it still meets your goals.

A trust created when children were young may not reflect adult beneficiaries, business ownership, new generations, and other significant life events. Similarly, a trust established by a grandparent decades ago may no longer align with today’s financial priorities or planning opportunities.

The federal estate tax exemption has risen to $15 million in 2026, creating a very different planning environment than when many irrevocable trusts were originally drafted. For many families, this shift marks an opportunity to reconsider their flexibility and long-term tax strategy while the estate tax exemption remains historically high. With that in mind, now is the ideal time to reassess whether an existing trust still serves its intended purpose.

Why Clients Set Up Irrevocable Trusts

Irrevocable trusts are often established to:

• Protect assets from personal creditors and lawsuits
• Provide “guardrails” for family members, including protections for beneficiaries with special needs, substance dependency concerns, potential future divorces, or predeceasing spouses
• Keep assets outside a beneficiary’s taxable estate, with limited exceptions

Irrevocable trusts can also create a structured plan for distributing wealth to children, grandchildren, or other family members over time. They allow families to set clear guidelines and protections while preserving assets for future generations.

These benefits are especially valuable for families with complex financial or business interests, or for those wishing to ensure certain assets are used as intended. For more information, see our blog post on the Top 5 Benefits of a Trust.

The Trade-Offs

While trusts provide valuable protections, they also come with considerations:

• Administrative duties, such as accounting, separate tax returns, and distribution requests, can be time-consuming and costly.
• Trusts can create a perceived or real loss of control over your assets.
• Limited flexibility can become a challenge as family circumstances change.

If your main goal remains long-term family protection, a trust may still be the best option. Regular reviews can identify ways to add flexibility for your family’s evolving needs; see our blog post on Best Practices for Irrevocable Trusts for guidance.

When It Might Be Time to Reconsider

Many trusts were originally created to minimize estate taxes. With federal exemptions now much higher, having risen from $13.99 million in 2025 to $15 million in 2026, these trusts may no longer serve their original purpose. For example:

• Trusts established when exemptions were $600,000–$1,000,000 may now be unnecessary for federal tax purposes.
• Maryland residents may still face state-level planning considerations, even if changes are smaller than federal adjustments.
• Income tax planning may now be a higher priority than estate tax planning. Assets held in trust generally do not receive a step-up in basis at death, which could trigger capital gains when the appreciated assets are sold, whereas assets held personally may allow for more favorable income tax treatment.
• Trust termination, either in whole or in part, can sometimes still be used to avoid probate with proper planning.
• Trusts divided among multiple beneficiaries may require careful coordination before considering early termination or distribution. Predeceasing spouses can also impact the structure and utility of existing trusts.

In some cases, trusts that were divided among multiple beneficiaries may require careful coordination before considering early termination or distribution. Predeceasing spouses can also impact the structure and utility of existing trusts, making review even more important.

This is where coordination matters most. Working alongside your CPA and financial advisor, the attorneys at Sessa & Dorsey can help evaluate whether changes improve both tax efficiency and long-term family outcomes.

Can You Terminate Your Trust?

Even if termination is possible, it may not be the right choice for every family. Key considerations include:

• Does the trust have a stated purpose that prevents early termination?
• Does the Trustee have authority to terminate or broadly distribute for the “best interests” of beneficiaries?
• If not, do all beneficiaries agree to terminate and on a plan for distribution?

Even when termination is allowed, it is important to carefully evaluate whether it truly benefits the family. Discussing your options with estate planning attorneys, financial advisors, and tax professionals is essential. For ideas on modifying an existing trust, see 3 Ways to Modify Your Trust Agreement for Changing Circumstances.

Adapting Your Trust to Changing Needs

Irrevocable trusts are not one-size-fits-all, and today’s high estate tax exemptions and shifting priorities make reviewing them more important than ever. Thoughtful planning can ensure your trust continues to provide protection, flexibility, and alignment with your family’s long-term goals.

Some families may identify opportunities to make limited distributions or modify trust terms while preserving creditor protection and estate planning benefits. Others may choose to terminate the trust if its original purpose, particularly estate tax deferral, is no longer necessary. In all cases, careful coordination with professionals helps prevent unintended tax consequences or family disputes.

Reviewing or modifying an irrevocable trust is a complex process that requires both technical expertise and careful attention to family dynamics. Even modest changes can create significant tax exposure, so each decision must be considered in context. At the same time, coordination among multiple advisors is essential to ensure strategies align and avoid conflicting outcomes.

Next Steps

With exemptions at historically high levels, now is an ideal time to reassess your trust and explore opportunities for tailored adjustments.

The attorneys at Sessa & Dorsey can assess your trust’s structure, powers, and potential distribution options within the context of your overall wealth and estate planning strategy. Our team works closely with your financial advisor, CPA, and other trusted professionals to ensure modifications align with your investment strategy, tax planning, and business succession goals.

If you are wondering whether your irrevocable trust still makes sense, or if you might benefit from early termination or partial distribution, contact us at (443) 589-5600 to schedule a review.