What is an Irrevocable Trust?

29 Jan 2020

An irrevocable trust is a type of trust that cannot be altered by the grantor without the permission of the beneficiary. A grantor may put assets in an irrevocable trust for a beneficiary to benefit from, or a revocable trust may become an irrevocable trust upon a grantor’s death. Another advantage is that an irrevocable trust gives an asset to a beneficiary on a conditional level. A trust can require that a beneficiary continue to go to college, or that they purchase a home with the funds.

The downside to an irrevocable trust is that the grantor permanently loses control over the asset in question, but when managing inheritances, it can be a way to avoid undue inheritance or income taxes. Upon the death of the grantor, an irrevocable trust can be formed specifically for the purposes of inheritance. Because an irrevocable trust is a separate entity from the original grantor, it needs its own Federal EIN (Tax ID) Number in order to operate properly. It is a separate taxable entity from the grantor and the beneficiary, which can protect them from the tax consequences of holding or inheriting the asset. You can obtain your Trust’s Federal EIN (Tax ID) Number online at the Trust Federal EIN (Tax ID) Number Application.