What is an Irrevocable Trust?

A grantor, or the person who wishes to establish a trust, creates an irrevocable trust when he or she executes a trust document that is permanent in nature.  The very definition of irrevocability implies an inability to change, and so is the case with an irrevocable trust. 

Assets in Irrevocable Trusts

Once a grantor has created an irrevocable trust, he or she no longer has any power or authority to change even the smallest detail of the trust, or to revoke the trust in its entirety.  Likewise, once the grantor transfers assets to a trust, they permanently belong to the trust, rather than to the grantor.  Any trust, however, will not be effective until it is funded by the grantor.  Therefore, once the grantor transfers assets and/or property to the trust, then the trust becomes effective.  Irrevocable trusts also may offer certain protections for their assets that are not available with revocable trusts.  For instance, assets in a revocable trust are still considered a grantor’s personal assets for income tax purpose, whereas assets in a irrevocable trust are not.  Likewise, irrevocable trusts remove taxable property from the grantor’s estate, thus exempting the trust property from estate taxes, which, again, operates so as to preserve the grantor’s assets. 

When do Revocable Trusts become Irrevocable?

Revocable trusts, or those trusts whose terms can be modified at any time during the life of the grantor, necessarily become irrevocable upon the grantor’s death.  Since the grantor is no longer present to make valid changes to the trust document, then the revocable trust automatically becomes an irrevocable trust. 

Do You Need a Lawyer?

Because the terms of an irrevocable trust cannot be changed or revoked, it is especially important that you work closely with an attorney who specializes in trusts and estates in order to include all provisions in the trust that you desire.  With the help of an attorney, you can ensure that your irrevocable trust  puts into place your proposed estate plan.