What is an Irrevocable Trust? | IRS Definition of a Irrevocable Trust
An irrevocable trust is a trust that cannot be removed or modified by the individual who originally set it up. Commonly, irrevocable trusts are created as part of a will; it cannot be modified because the individual who provided the assets is deceased. But an irrevocable trust can also be made during someone’s lifetime, they simply have to be aware that they cannot change the trust once it has begun.
A trust is something that holds an asset, usually to the benefit of a beneficiary. In the case of an irrevocable trust, someone might create an irrevocable trust to distribute assets to a charity over the course of ten years. Before that ten years is complete, the donor will not be able to change the trust at all. The charity will have the knowledge that it will get that asset distribution consistently over ten years.
Another type of irrevocable trust could be a grandparent creating a trust to be formed upon their death for their grandchild. Rather than simply giving the child money, the grandparent can create a trust that will control what the money can be used for, such as education, and avoid issues such as over-taxation.