A trust with terms and provisions that cannot be changed by the grantor. This is distinguished from a revocable trust, which is commonly used in estate planning and allows the grantor to change the terms of the trust and/or take the property back at any time.
An irrevocable trust is a legal agreement whose terms cannot be changed by the creator, or grantor, who establishes the trust, chooses a trustee, and names the beneficiary or beneficiaries. An irrevocable trust is simply a trust with terms and provisions that cannot be changed by the grantor. This is distinguished from a revocable trust, which is commonly used in estate planning and allows the grantor to change the terms of the trust and/or take the property back at any time. An Irrevocable Trust is one that by its design can't be amended, modified, changed or revoked. In other words, once an Irrevocable Trust has been created, the written terms of the trust agreement are generally written in stone and can't be tweaked for any reason in the future. With a revocable trust, however, you can place property into the trust and at some point in the future, undo the transfer by removing the property and terminating the trust. Very often, if you die or become incompetent, the provisions of a revocable trust call for the trust to become an irrevocable trust. Irrevocable Trust. A trust into which a grantor deposits assets for use by a beneficiary where the terms of the trust cannot be modified or abrogated without permission of the beneficiary. That is, when a grantor sets up an irrevocable trust, he/she completely relinquishes ownership of the assets placed in the trust. If you ask for a revocable trust and get an irrevocable one, or vice versa, the legal and tax consequences will be significant. Revocable Living Trusts. A Revocable Living Trust, also known as a Revocable Trust, Living Trust or Inter Vivos Trust, is simply a type of trust that can be changed at any time. Irrevocable trust asset protection is the strongest domestic asset protection available, hands down – that is, when it's properly set up and implemented. The reason why is because you are literally separating your assets from yourself. Once in the irrevocable trust, the assets are no longer yours. BREAKING DOWN 'Irrevocable Trust'. The main reason for setting up an irrevocable trust is for estate and tax considerations. The benefit of this type of trust for estate assets is that it removes all incidents of ownership, effectively removing the trust's assets from the grantor's taxable estate. So, an irrevocable living trust is a trust that 1) goes into effect during the grantor’s life and 2) cannot be revoked. To confuse things further, a “testamentary” is a trust that is made during a grantor’s life, but does not go into effect until the grantor’s death. When a grantor funds an irrevocable trust with property during his or her lifetime, and the grantor is neither a trustee nor beneficiary of the trust, he or she is giving up all right, title, and interest to that property — the legal definition of a gift.
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what is a irrevocable trust