The difference between a revocable and irrevocable trust is that you can change a revocable trust, but you can’t do anything with an irrevocable trust except use any income it generates. Keep this in mind as you read about this recent case.
William Ash was the beneficiary of an irrevocable trust created by his mother's will. Ash also personally owned another batch of stock in a bank (worth $1,241,920). Ash was advised to set up a trust to protect the stock from his creditors.
He claims that he hired an attorney to create a new revocable trust to receive the stock. He met his attorney at the bank and signed some documents. All he remembers is that he saw that the stock was going into a trust.
The documents actually included a stock power that transferred his individually owned stock into the irrevocable trust created by his mother, which he found out when he tried to borrow money from the bank secured by the stock. The bank declined because the stock was now owned by the irrevocable trust, and the trustee didn't agree to the loan.
Ash sued the bank for putting the money in the wrong trust. The trial court granted summary judgment to the bank; in other words, the bank won its argument. The Arkansas Court of Appeals mostly agreed with the trial judge.
The Court of Appeals restated its position that you really ought to read things before you sign them. Ash signed the transfer of the stock into the irrevocable trust, and therefore he lost control. However, the Court of Appeals did find that there was still a question as to whether or not the bank breached a duty of care to Ash when it let him make the transfer.
All of this headache was caused by the presence of just two little letters on the front of the trust documents--i and r, turning a revocable trust that would have let Ash keep control, into an irrevocable trust. If you want to read the whole case, look for a link here.