What is an irrevocable trust and what are its tax advantages?
When you create a trust, you decide whether the trust will be revocable or irrevocable. A revocable trust can be changed or even dissolved by you at any time. An irrevocable trust, however, can never be changed. The assets you put into it must stay there. Beneficiaries cannot be added or deleted. And the only way to change the trustee is for that person to die or agree to resign. Why then would you choose to make your trust irrevocable? For tax advantages. An irrevocable trust or the beneficiary of the trust pays the income taxes on what its assets earn. When you die, the trust property is not part of your estate and is not subject to estate taxes (assuming your estate is big enough). Conversely, revocable trusts offer no tax benefits at all. If you want flexibility, make your trust revocable. But if you need tax breaks, you may want to forgo flexibility and form an irrevocable trust instead. What is a settler of a trust? The settler of a trust, also known as the trustor, creator, gran
