Definition
A trust that, once funded, generally cannot be changed or undone by the person who created it. The grantor gives up ownership and control of the assets, which is exactly why they can be excluded from the grantor's taxable estate and, in many cases, shielded from the grantor's future creditors.
Why it matters
Irrevocable trusts are the tool for estate-tax planning, holding life insurance outside the estate, providing for a family member with special needs, and long-term care planning. The price is real: the money is no longer yours, and assets given away this way usually lose the step-up in basis they would get if held until death.
Example
A grandmother moves $1,500,000 of stock into an irrevocable trust for her grandchildren. If it grows to $3,000,000 over the next 15 years, that growth happens outside her estate, and the trust pays out on the schedule she wrote, even to grandchildren who are still minors. What she cannot do is take the money back to cover a medical bill; only a living trust would allow that.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.