An irrevocable trust is a one where the grantor sets up a trust so that he/she may never obtain access to the funds again. This can be useful in a variety of estate planning situtations including avoiding taxes and preventing survivors from altering the grantor trust or withdrawing the funds against the wishes of the creator of the grantor trust. If the irrevocable trust is small it can be used as a gifting mechanism and be free of gift tax. In this situation the grantor trust can set up the irrevocable trust or irrevocable life insurance trust and deposit roughly 13,000 per year into the irrevocable trust free of gift tax.
An irrevocable life insurance trust is simply an irrevocable trust or grantor trust where the grantor purchases a life insurance policy which will be set into an irrevocable life insurance trust before or after the date of death. The irrevocable life insurance trust is a tricky estate planning tool and is a type of irrevocable trust/grantor trust that should be used with caution. If you are interested in learning more about the irrevocable trust/grantor trust refered to as an irrevocable life insurance trust contact me for a free consultation and pricing.