What is an irrevocable trust?
A. Think of a trust as a box into which you can put all types of assets. A revocable trust is like a box with a string on it. By pulling on the string, you can recover the property you placed into the box or change the terms of the agreement you made when you set up the box. If you set you the box without a string of if you cut the string you kept when you set up the box, your trust becomes irrevocable. You cant revoke it. You can no longer reach in and get back cash or other assets you put into the trust. Nor can you unilaterally change the terms of the trust. The term irrevocable trust is usually used to describe a living or inter vivos trust created during the lifetime of the grantor (thats you, the person who creates and funds the trust) that cannot be revoked, altered, amended, or terminated by the grantor. The grantor transfers legal title to property (called corpus or principal) to the trustee (the person or parties) who hold(s) legal title to the property placed into the trust.
An irrevocable trust is a trust in which the creator transfers assets to a trust with no power to alter, amend, or revoke the terms of the trust at a later date. Unless the creator retains certain powers or benefits, income generated by the trust and distributed to a trust beneficiary is taxed to the beneficiary; all other trust income (undistributed or accumulated income) is taxed to the trust’s fiduciary. Copyright 2009 FindLaw, a Thomson Business DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.
