What Does It Mean When A Trust Becomes “Irrevocable”?

The distinction between a revocable and an irrevocable trust is an important one because it determines whether a particular trust may be modified afterwards by the trustor (the person creating and funding the trust). The Trustor may need to modify her trust because of marriage, family disputes, financial issues and other matters related to tax planning. Before creating a trust you need to carefully plan out which trust terms must be used to accomplish your estate planning goals.

Whereas a revocable trust can be modified, amended or even terminated by the trustor, an irrevocable trust is one that cannot be modified or terminated by the trustor. The trustor loses all control over property that is transferred to an irrevocable trust; the transfer is a completed gift according to the legal definition of a gift. This limitation would appear to make a revocable trust the more attractive option for most individuals; however, irrevocable trusts are designed to transfer property out of the trustor’s estate thereby reducing the trustor’s estate tax liability.

Lastly, most revocable trusts are designed to become irrevocable upon the occurrence of a triggering event, such as the death of one of the trustors. At that time the trust can no longer be modified by the surviving trustor but once again this is usually done to minimize the estate tax that is owed upon the death of each trustor. The type of trust that is right for you will be determined by both the size of your estate and your goals for the legacy that you leave to your heirs.

An experienced trust and estate planning attorney is available for a complimentary consultation at Nielsen Law Group to discuss your goals and the means to reduce your potential estate tax liability through the use of the right kind of trust. You can schedule your initial consultation by calling (480) 888-7111 or submitting a web request here.