When you create a trust, you decide whether the trust
will be revocable or irrevocable. A revocable trust can be changed or
even dissolved by you at any time. An irrevocable trust, however, can
never be changed. The assets you put into it must stay there.
Beneficiaries cannot be added or deleted. And the only way to change
the trustee is for that person to die or agree to resign. Why, then,
choose to make your trust irrevocable? For tax advantages. An
irrevocable trust itself pays income taxes on what its assets earn.
When you die, the trust property is not part of your estate and will
not be subject to death taxes. Conversely, revocable trusts offer no
tax benefits at all. If you want lots of flexibility, make your trust
revocable. But if you want tax breaks, you must forgo flexibility and
form an irrevocable trust instead.