Irrevocable trust
Also: irrevocable trust, irrevocable living trust
A trust that cannot be modified, amended, or revoked by the grantor after creation, except by court order or per the terms of the trust. Assets contributed are generally removed from the grantor's taxable estate.
An irrevocable trust is a trust where the grantor has permanently given up the right to change its terms, remove beneficiaries, or reclaim the assets. The irrevocable nature is what creates the tax and asset-protection benefits: gifts to the trust are completed gifts (using the annual exclusion or lifetime exemption), and the assets are excluded from the grantor’s taxable estate at death. Most estate planning vehicles, IDGT, GRAT, ILIT, and dynasty trust, are irrevocable. A revocable living trust, by contrast, provides probate avoidance but no estate tax benefit.
Example: a tech executive funds an irrevocable dynasty trust with $5 million of pre-IPO shares in 2025, applying $5 million of lifetime exemption. The shares IPO and rise to $30 million over four years. The $25 million appreciation grows outside her taxable estate permanently. At her death the entire trust passes to beneficiaries without estate tax on that $30 million.
Common mistake: funding an irrevocable trust with assets needed for personal cash flow. The transfer is permanent, and distributions are at the trustee’s discretion.
Irrevocable trusts matter at high-net-worth wealth transfer, at asset protection planning, and at generation-skipping strategies that require multi-generational shelter.