Explain Irrevocable Trusts

We explain irrevocable trusts in this section. We already explain irrevocable trusts as cannot be revoked, unlike revocable trusts. In this section, we further explain irrevocable trusts rules and the protection they offer against lawsuits and creditors.

Irrevocable trusts explained

To be an irrevocable trust, the trust must comply with the following irrevocable trust rules.

• The trustee of the irrevocable trust must be independent and cannot be the trustor.

   

• The beneficiary is not the trustor who created the irrevocable trust.

   

• The trustor or person who created the irrevocable trust does not retain the right to revoke, amend, or alter the irrevocable trust in any way.

   

• Income and disbursement records are maintained.

   

• The irrevocable trust's interests lie with the beneficiaries of the irrevocable trust.

   

• The irrevocable trust is drafted and operated as a business to avoid any fraud or sham.

If the beneficiaries are the children of the trustor, once the beneficiaries are of legal age, the irrevocable trust document may say that the irrevocable trust will terminate. Once the irrevocable trust terminates, all assets in the irrevocable trust can be transferred to a family limited partnership for further asset protection.