Q:

What is an irrevocable trust?

A:

Quick Answer

An irrevocable trust cannot be modified or terminated without permission from the beneficiary. According to the Free Dictionary, transferring assets into an irrevocable trust effectively removes all of a person's rights of ownership to the assets in the trust.

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What is an irrevocable trust?
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Full Answer

An irrevocable trust is the opposite of a revocable trust that allows the grantor to modify the trust. As Investopedia explains, the primary reason for an irrevocable trust is tax considerations. This type of trust “removes all incidents of ownership,” essentially removing the trust’s assets from the grantor’s taxable estate. In an irrevocable trust, the grantor is relieved of the tax liability on the income generated by the assets.

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