Getting back to people with a great deal of wealth, there is a federal estate tax. It is applicable on the portion of an estate that exceeds the exclusion. This exclusion is over $12.9 million at the time of this writing.
People that are exposed to the estate tax will use irrevocable trusts of various kinds. When you convey assets into this type of trust, they are no longer part of your estate. These wealth protection trusts facilitate transfers at tax discounts.
There are irrevocable self-settled asset protection trusts that protect assets from future creditors. This type of trust is not recognized in California, but you could establish one in Nevada or another state where they are accepted.
A lot of people seek Medi-Cal eligibility late in their lives because this program will pay for a stay in a nursing home. Medicare does not cover the custodial care that nursing homes provide.
Since it is a need-based program, you cannot qualify for Medi-Cal if you have significant assets in your name. Assets that are held by an irrevocable trust would not be counted if you apply for Medi-Cal.
These are a few of the different reasons why an irrevocable trust can be used, and there are others.