Unlike a living trust, an irrevocable trust can't be changed or dissolved once it has been created. You generally can't remove assets, change beneficiaries, or rewrite any of the terms of the trust. Still, an irrevocable trust is a valuable estate planning tool. First, you transfer assets into the trust--assets you don't mind losing control over. You may have to pay gift taxes on the value of the property transferred at the time of transfer.  Irrevocable trusts offertax advantages that revocable trusts don't, for example by enabling a person to give money and assets away even before he/she dies which is the opposite of arevocable trust.

Provided that you have given up control of the property, all of the property in the trust, plus all future appreciation on the property, is out of your taxable estate. That means your ultimate estate tax liability may be less, resulting in more passing to your beneficiaries. Property transferred to your beneficiaries through an irrevocable trust will also avoid probate. As a bonus, property in an irrevocable trust may be protected from your creditors.  

There are many different kinds of irrevocable trusts. Many have special provisions and are used for special purposes. Some irrevocable trusts hold life insurance policies or personal residences. You can even set up an irrevocable trust to generate income for you.

Whether you're seeking to manage your own assets, control how your assets are distributed after your death, or plan for incapacity, trusts can help you accomplish your estate planning goals. Their power is in their versatility--many types of trusts exist, each designed for a specific purpose. A trust is a legal entity that holds assets for the benefit of another. Basically, it's like a container that holds money or property for somebody else. You can put practically any kind of asset into a trust, including cash, stocks, bonds, insurance policies, real estate, and artwork. The assets you choose to put in a trust depend largely on your goals. Since trusts can be used for many purposes, they are popular estate planning tools. Trusts are often used to:  

·        Minimize estate taxes

·        Shield assets from potential creditors

·        Avoid the expense and delay of probating your will

·        Preserve assets for your children until they are grown (in case you should die while they are still minors)

·        Create a pool of investments that can be managed by professional money managers

·        Set up a fund for your own support in the event of incapacity

·        Shift part of your income tax burden to beneficiaries in lower tax brackets

·        Provide benefits for charity