Irrevocable trust

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Irrevocable trust

A trust that is unable to be amended, altered, or revoked.

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. As a result, an irrevocable trust is not usually considered part of the grantor's estate for estate tax purposes.

irrevocable trust

A trust in which the grantor gives up any right to amendments or termination. Income from an irrevocable trust is taxable to the beneficiary if disbursed or to the trust if not disbursed. Compare revocable trust.

Irrevocable trust.

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.

The trust document names a trustee who is responsible for managing the assets in the best interests of the beneficiary or beneficiaries and carrying out the wishes the creator has expressed.

You typically use an irrevocable trust for the tax benefits it can provide by removing assets permanently from your estate.

In addition, through the terms of the trust you can exert continuing control over the way your property is distributed to your beneficiaries. Trusts have the additional advantages of being more difficult to contest than a will and more private.

If you establish an irrevocable trust while you're still alive, it's called a living or inter vivos trust. If you establish the trust in your will, so that it takes effect at the time of your death, it's called a testamentary trust.

References in periodicals archive ?
Decedent's retained power to substitute successor corporate trustees did not trigger estate inclusion of irrevocable trusts.
The minimum account size for revocable and irrevocable trusts is $400,000 in cash, mutual funds or individual securities.
Letter Ruling 9227013 considered irrevocable trusts in which each grantor reserved for himself a lifetime power to substitute other property of equivalent value in the trust without the approval or consent of any other person, including the trustees.
In IRS Letter Ruling 9140047,[98] the grantor established identical irrevocable trusts for his three children and seven grandchildren.
Fidelity Personal Trust Services minimum account size is $400,000 (cash, mutual funds, or individual securities) for living, revocable and irrevocable trusts and $200,000 for charitable trusts; an annual fee is charged based on the total assets of the account.
In IRS Letter Ruling 9113010,[1] in 1987, the grantor established five irrevocable trusts, one for each of his two children (adults) and three grandchildren {minors).
Irrevocable trusts can be an effective planning technique to reduce estate taxes.
Virtually all investment income earned within most irrevocable trusts, however, is taxed at the highest tax rate.
There are strategies lo save income taxes when irrevocable trusts have been created at death.
In contrast, irrevocable trusts are often created by wealthy individuals who want their assets to be used for the benefit of a person who may need assistance in the management or administration of the assets.
The second most popular trusts are testamentary irrevocable trusts, such as a Credit Shelter Trust (CST).