Essay
The Wall That Didn't Hold: Control, Irrevocable Trusts, and a $111 Million Lesson
Can an irrevocable trust shield assets when the grantor never truly lets go?
A New York court just answered — and the answer should make every planner who leans on “irrevocable” as a magic word uncomfortable.
The case
In C.S. v. R.H. (N.Y. Sup. Ct., N.Y. County, 2025), a case of first impression, the court included roughly $111.2 million of irrevocable-trust assets in a $181 million marital estate. The husband had done the paperwork. The trusts were irrevocable. The tax structure was intact. But he had also stayed on as grantor, kept the power to remove and replace trustees, and served as investment advisor with broad discretion over the assets. He never actually relinquished control — and the court saw through the label to the reality. The wife was awarded 50 percent. (Summary via the JD Supra Wealth Management Update, July 2026.)
Why the tax plan survived and the shield didn’t
This is the distinction that gets lost in a hundred planning conversations: estate-tax effectiveness and creditor/divorce protection are not the same test. A trust can be perfectly drafted to move assets out of your taxable estate and still be treated as yours when a court asks who really controls it. Different questions, different doctrines, different outcomes — from the exact same document.
The mechanism here was retained control. Removal power over trustees, an investment-advisor role with real discretion, the grantor’s fingerprints on every decision — each one is a thread, and a court weaving them together can conclude the “wall” was decorative. Irrevocability on paper is not the same as letting go in fact.
The fiduciary read
The lesson is not “don’t use irrevocable trusts.” It is that protection is a function of genuine relinquishment, not of the word on the cover page. If the point of a structure is to put assets beyond your reach, you have to actually put them beyond your reach — which usually means an independent trustee with real authority and a grantor who steps back and means it. The families who want both total control and total protection are asking for a wall with a door they keep the key to. Courts have started noticing the key.
I cover how trusts fit into a lifetime plan in the Wealth Guide — and control, in the end, is the currency you trade for protection. You can hold it or you can shed it. What you can’t do is keep it and still claim you gave it away.
Source: Wealth Management Update — July 2026 (JD Supra), summarizing C.S. v. R.H. (N.Y. Sup. Ct. 2025). Educational only — not legal advice.