- A trust sets up a legal structure in which one party (the settlor) legally transfers his assets to a second party (the trustee), so the trustee may hold and manage the assets for the benefit of another party (the beneficiary.)
- Many types of trusts remain revocable until the settlor dies. However, in an irrevocable trust, the settlor theoretically cannot make any changes once the trust has been executed. Most states will assume that a trust is irrevocable unless language in the trust stipulates otherwise.
- An irrevocable trust is useful because it allows an individual to plan for the moment when he might become mentally incapacitated. A trust may also shield the assets from creditors or levy of estate taxes.
Changing Irrevocable Trusts
- An irrevocable trust does not become truly "irrevocable" until the settlor's death. If, during the settlor's life, all parties concerned (the settlor, trustee and all beneficiaries) consent, they may revoke the trust.