Definition - What does Irrevocable Trust mean?
An irrevocable trust is one in which the owner of an estate transfers their right of ownership to somebody else. It also absolves the owner of any tax liability regarding the estate. However, once it is established, the grantor or the original estate owner can no longer modify or change the nature of this trust.
Insuranceopedia explains Irrevocable Trust
No longer having to pay taxes is the major reason people set up irrevocable trusts. The grantor becomes exempt from taxation because they are no longer the legal owner of the entrusted property.
This trust is sometimes used for life insurance, in which case it is called an irrevocable life insurance trust. Under such a trust, the insurance payout from a death benefit will not go to the estate and will not be taxed.
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