An Irrevocable Trust is one that can’t be modified or terminated without the permission of the beneficiary. The grantor, having transferred assets into the Irrevocable Trust, effectively removes all of his or her rights of ownership to the assets and the Trust.
Estate and tax considerations are the main reasons for setting up an Irrevocable Trust. The advantage of this type of Trust for estate assets is that it eliminates all incidents of ownership, successfully removing the Trust’s assets from the grantor’s taxable estate. The grantor is also relieved of the tax liability on the income generated by the Trust assets. While the tax rules will differ between jurisdictions, in most cases, the grantor can’t receive these benefits if he or she is the Trustee (manager) of the Trust.