Irrevocable Trust


DEFINITION of 'Irrevocable Trust'

A trust that can't be modified or terminated without the permission of the beneficiary. The grantor, having transferred assets into the trust, effectively removes all of his or her rights of ownership to the assets and the trust.

This is the opposite of a "revocable trust," which allows the grantor to modify the trust.


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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. The grantor is also relieved of the tax liability on the income generated by the assets. While the tax rules will vary between jurisdictions, in most cases, the grantor can't receive these benefits if he or she is the trustee of the trust.

The assets held in the trust can include, but are not limited to, a business, investment assets, cash and life insurance policies.

For more on Irrevocable Trusts (and other types of trusts) check out How To Set Up A Trust Fund or our Estate Planning Tutorial

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  1. What is the difference between a revocable trust and an irrevocable trust?

    An irrevocable trust and a revocable trust are differentiated through the ability to change the trust. With an irrevocable ... Read Full Answer >>
  2. Can trust funds be activated before the grantor intended?

    It is not possible to modify the activation of a trust fund without the consent of the grantor. Trust law lays out certain ... Read Full Answer >>
  3. What are the keys to setting up a trust fund?

    A trust is a good way to ensure that your assets are used in a way you desire, by the persons you want to have them, and ... Read Full Answer >>
  4. What are the requirements that a trust needs to meet to be qualified?

    The requirements that a trust must meet to be qualified are as follows: The trust must be a valid trust under state law ... Read Full Answer >>
  5. How much money does Texas make from unclaimed property each year?

    In 2014, the office of the Texas Comptroller of Public Accounts reported $234 million in unclaimed property claimant liabilities, ... Read Full Answer >>
  6. How much money does Michigan make from unclaimed property each year?

    According to the 2013-2014 Annual Report of the State Treasurer, the state of Michigan earned only $82,875 in abandoned and ... Read Full Answer >>

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