Irrevocable Trust

Definition

An irrevocable trust is a legal arrangement in which the grantor permanently transfers assets into a trust that cannot be easily modified or revoked without the beneficiaries' consent. For tax purposes, an irrevocable trust is generally treated as a separate taxable entity required to file its own income tax return on Form 1041. These trusts are commonly used for estate planning, asset protection, and reducing the grantor's taxable estate.