We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

How do I Set up an Irrevocable Trust?

By S. Closser
Updated: May 17, 2024
Views: 3,468
Share

To create an irrevocable trust, the grantor must draft the trust's terms and conditions, identify the beneficiaries, transfer property to the trust, and register it with the appropriate tax authorities. The grantor must also name a trustee — the person who will have control over and administer the trust. A person who is the grantor cannot also be the trustee on his own irrevocable trust. The grantor has total control over all the details of the trust while it is being set up, including exactly what will be given to each beneficiary and when. Once the trust is created, the grantor gives up all control of the assets.

Estate planning is serious business, and establishing an irrevocable trust is a complex piece of that process. This is actually a form of protection for those with assets, since an irrevocable trust cannot be changed or reversed without the involvement and consent of the beneficiary. By creating an irrevocable trust, the grantor permanently transfers his assets to a separate entity — the trust.

The purpose of creating this kind of trust is usually to alleviate tax consequences, so it is important that it is created correctly. If it is done right, upon the grantor's death, the trust assets will be distributed without the costs and delays of probate. A well-written trust will not result in tax or financial aid consequences for beneficiaries, and will not cause its assets to become vulnerable if a beneficiary is sued, involved in a divorce, or has other liability problems. Irrevocable trusts are often designed to be the beneficiaries of insurance policies. They are also used to manage money given to minors or charities.

Irrevocable trust forms can be found on the Internet, but because of the nature of the trust, it should not be created without the help of an experienced legal professional. These trusts allow the grantor to sidestep some of the estate and income tax ramifications. If it is done incorrectly, it could result in fines or tax penalties, which would not meet the trusts' intended purposes. In the United States, there are local, state, and county laws that may impact the documentation needed in setting up an irrevocable trust. Grantors should be sure that the legal professional they hire is licensed in their state and has solid recommendations by trusted sources.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

Editors' Picks

Discussion Comments
Share
https://www.wisegeek.net/how-do-i-set-up-an-irrevocable-trust.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.