An irrevocable trust is a legal arrangement where a person transfers irrevocable ownership of assets to a trust, and designates a trustee, to manage those assets for the benefit of the trust’s beneficiaries. Once the trust is created, it becomes a separate legal entity.
The settlor then transfers ownership of assets to the trust, to be held by the trustee. This transfer is irrevocable, meaning the settlor cannot reclaim the assets or dissolve the trust without the consent of the trustees and beneficiaries or a court order.
The trustee is responsible for managing the assets according to the terms of the trust and in the best interests of the beneficiaries. The trustee carries out the duties outlined in the trust agreement, for the period of time also outlined in the trust. This may include investing and managing the trust assets, distributing income or principal to beneficiaries, paying taxes and expenses, and maintaining accurate records of all transactions.
The trust also specifies the rights and entitlements of the beneficiaries. These can include income distributions, access to trust principal under certain conditions, or other provisions as outlined by the settlor. The beneficiaries generally cannot modify or revoke the trust unless granted such powers by the trust agreement or by court order.
It’s important to note that trust laws can be complex and subject to change, so it’s always recommended to seek advice from an experienced attorney if you are considering a trust!