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Irrevocable Trust

   Also found in: Wikipedia 0.01 sec.
Irrevocable trust
A trust that is unable to be amended, altered, or revoked.

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.


Irrevocable Trust

What Does Irrevocable Trust Mean?

A trust that cannot be modified or terminated without the permission of the beneficiary; the grantor, having transferred assets into the trust, effectively relinquishes all 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.

Investopedia explains Irrevocable Trust

The main reason for setting up an irrevocable trust is 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 also is relieved of the tax liability on the income generated by the assets. Although the tax rules vary among jurisdictions, in most cases the grantor cannot receive those 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.

Related Terms:
Annuity
Money Market Account
Mutual Fund
Private Equity
Investment Bank



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2601-1(b)(1)(i) (TD 8644, 12/26/95), which provided that the grandfathering rules do not apply to a pro-rata portion of any GST under an irrevocable trust if additions are made to the trust after Sept.
Principal Financial, Des Moines, Iowa, announced its Disability Insurance Retirement Security program, which pays benefits to an irrevocable trust.
Intentionally Defective Grantor Trusts--A "defective" grantor trust is an irrevocable trust that is effective in shifting ownership of assets out of a grantor's estate but for which the grantor remains treated as the owner for purposes of income taxes.
 
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