Irrevocable Living Trust (Definition)
Irrevocable Living Trust: In contrast to a revocable trust, an irrevocable trust is one which will not come to an end until the terms of the trust have been fulfilled. Source
What Does it Do?
An irrevocable trust is designed to accomplish a specific task. In comparison to a revocable trust, irrevocable trusts are very rare because they are, in their very nature, unchangeable. Its purpose is to provide asset succession or support arrangement.
A few examples of some common types of irrevocable trusts are:
- Irrevocable Life Insurance Trust – Setup for the purpose of avoiding taxes from a life insurance death benefit.
- Irrevocable Charitable Remainder Trusts – Distributes income during the lifetime of its beneficiaries and then donates the rest to charity upon the death of beneficiaries.
- Irrevocable trust designed to restrict the use of the assets paid to beneficiaries.
Who Needs It?
While irrevocable trusts are rare, there are still several instances that it would be valuable. For example, a trust could be setup to help support adult children, educate grandchildren, or provide a regular income to an improvident child.