What is an irrevocable trust?

An irrevocable trust is defined by its inability to be altered, modified, or terminated by the grantor without the consent of the beneficiaries. Once the trust is established and funded, the grantor relinquishes control over the assets placed within the trust, making it a permanent fixture in the estate planning process. This characteristic provides benefits such as asset protection, potential tax advantages, and trust management by a trustee independent of the grantor’s wishes.

In contrast, the other options address concepts that do not accurately capture the nature of an irrevocable trust. A trust that can be modified by the grantor would be classified as a revocable trust, allowing flexibility and control; this is not applicable to an irrevocable trust. Similarly, a requirement for a court order for enforcement misrepresents the typical operation of an irrevocable trust, as these trusts normally become effective upon execution and funding without needing judicial intervention for enforcement. Additionally, a trust that automatically expires after a fixed term does not reflect the essence of irrevocability; while irrevocable trusts can have specified terms in which they operate, the critical aspect is that they cannot be changed or terminated by the grantor without beneficiary consent.

Thus, the accurate definition of an irrevocable trust emphasizes its permanence and