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What is an Irrevocable Trust?

Updated: May 7

There is no way to know with certainty what the future will hold. Because of this, you may want to set up an irrevocable trust to protect your assets for the benefit of beneficiaries.

Irrevocable trusts have many benefits, but they do have some drawbacks.

Keep reading to learn more about irrevocable trusts so you can make an informed decision on whether or not it is the right tool to add to your estate planning checklist.

What is an Irrevocable Trust?

An irrevocable trust is a way of distributing assets after you die. It usually cannot undergo alteration by the person who established it. While there are ways to change an irrevocable trust you, the grantor, cannot make them once it’s made final.

When assets are put into an irrevocable trust, they become the property of the trust itself. This means they no longer belong to you, even while you're still living. Because of this, you need permission from all the beneficiaries or a court ruling to modify it or take anything out.

Parties of an Irrevocable Trust

The parties of a trust remain the same whether it’s revocable or irrevocable. However, irrevocable trusts have a few additional name varations. Despite this, the names don’t change the role.


The grantor is the creator and funder of a trust. They have the full authority to add assets and create terms for the trust until it gets finalized. A grantor is also responsible for naming a trustee and beneficiaries to receive the contents of the trust.


A trustee is responsible for managing the trust based on the terms laid out by the grantor. This could mean anything from investing the assets in the trust to distributing its contents to a beneficiary.


The beneficiary of a trust is someone that receives content from it. The grantor can name as many or as few people as they see fit.

What is the Purpose of an Irrevocable Trust?

The purpose of an irrevocable trust is to keep assets protected, reduce estate taxes, and ensure a quick transfer of assets after your death.

There are many reasons you might want to consider establishing an irrevocable trust as part of your estate plan.

Reduce Estate Taxes

Most, if not all trusts are not tax-exempt. However, setting up an irrevocable trust allows your beneficiaries to avoid paying estate taxes on the assets they receive from it. This is possible because the government assumes taxes have already been paid on the property in the trust.

An irrevocable trust is usually taxed one of two ways:

  1. The grantor pays taxes on an individual level each year

  2. The trust itself receives a yearly deduction based on the taxes incurred

Transfer Trust Contents Immediately Upon Death

With an irrevocable trust, your beneficiaries can receive the contents of the trust immediately after your death. Without it, they would have to wait several months to see a penny. The delay is because most assets that aren't in a trust must go through the lengthy probate process.

While there are other ways to avoid probate, the additional benefits of an irrevocable trust can make it the most attractive option for keeping assets protected.

Keep Assets Protected

Since the items in an irrevocable trust are no longer in the name of the person who established it, all the trust’s contents remain protected. This means irrevocable trusts are (usually) safe from creditors, lawsuits, and (ex)spouses.

This doesn’t mean you should set up a trust to get out of paying large amounts of outstanding debt. A court may give creditors access to the funds within the trust if they are convinced you established the trust to defraud the creditors.

Keep Finances Private

Since trusts avoid probate, they aren’t made public. Leaving beneficiaries large sums of money or other valuable assets in a trust protects them from jealous people because the asset transfer stays private. Additionally, it keeps their friends and family from coming out of the woodwork asking them for money.

Maintain Eligibility for Government Programs

Putting assets into an irrevocable trust can help you qualify for government assistance.

The costs of nursing homes and hospital bills can quickly add up. Government programs, such as Medicaid, can help. However, there are income caps to qualify for such programs.

While you may be able to afford nursing homes and medical bills, you will be burning through cash that could otherwise be left to loved ones.

How Does an Irrevocable Trust Work?

An irrevocable trust works similarly to a revocable trust. A person, the grantor, puts money into a trust and names someone the trustee to oversee it.

They must also name at least one beneficiary to receive the contents of the trust.

Unlike a revocable trust, the grantor cannot also be the trustee of a revocable trust. However, the trustee can be a beneficiary.

Who Owns the Property in an Irrevocable Trust?

The trust itself owns its contents, and the trustee owns the trust. Trustees have a lot of power when it comes to asset distribution. For these reasons, it’s important to “trust” the person you name as trustee. They should manage the trust with the beneficiaries’ best interests in mind.

Pros and Cons of an Irrevocable Trust

With anything, there are pros and cons. It’s important to weigh them out to determine if an irrevocable trust is right for you.


  • Protect assets from creditors, lawsuits, and bad marriages

  • Irrevocable trusts avoid probate

  • Beneficiaries receive assets immediately after your death

  • Can save loved ones thousands in court fees and estate taxes


  • You lose ownership of what gets put into the trust

  • You won’t have access to your assets in the event of financial hardship

  • No control of the trust’s contents

  • Can be costly to set up and fund

How Much Does an Irrevocable Trust Cost?

Depending on the size of your estate and tax goals, setting up an irrevocable trust can cost between $1,000 and $6,000. The upper portion of this range is generally from those firms that bill you hourly. Fortunately, atCAUSE Law Office charges a flat rate, so the price we quote you is the price you pay.

You might have seen some downloadable, do-it-yourself trust kits online. Unless you’re an expert, we highly discourage this. Hiring an estate planning attorney will ensure you set up the trust to maximize the benefits for you and your loved ones.

Other costs associated with establishing an irrevocable trust include taxes and transferring assets into it.

Taxable events can be adding assets to the trust and capital gains from investments within the irrevocable trust.

Also, some trusts require a transfer fee of around $100 per asset you transfer.

Establish an Irrevocable Trust With atCAUSE Law

Our experienced attorneys always have your best interest in mind. We will advise you and answer any question you have in an easily understandable way. Call us or send us an email to schedule a consultation today!

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