An irrevocable trust is a trust that cannot be amended, modified, or terminated by the grantor, settlor, or trustor (person who created the trust) after it is created—at least not without the permission of the beneficiary or beneficiaries.
Irrevocable trusts generally offer tax benefits that revocable trusts do not. This is primarily because the grantor, settlor, or trustor who creates an irrevocable trust permanently transfers (gifts) all right of ownership of the assets to the trust and its beneficiaries.
Laws vary from state to state but a trust is usually irrevocable unless the grantor, settlor, or trustor specifies otherwise in the trust agreement.
In Texas, an irrevocable trust is a type of trust that, once established, cannot be altered, amended, or revoked by the grantor, also known as the settlor or trustor. The grantor effectively relinquishes all control and ownership of the assets placed into the trust, which are then managed by a trustee for the benefit of the trust's beneficiaries. The main advantage of an irrevocable trust is the potential for tax benefits, as the transferred assets are generally removed from the grantor's taxable estate, potentially reducing estate taxes and protecting assets from creditors. Texas law requires that the terms of the trust must clearly state whether it is revocable or irrevocable. If the trust document does not specify, it is presumed to be revocable. However, once declared irrevocable, the trust typically cannot be changed without the consent of the beneficiaries or by court order under certain circumstances, such as in the case of reforming a trust to correct a mistake or to achieve the grantor's tax objectives.
