The objective is to avoid having it included in their taxable estates when they die. Crummey trusts are a common type of irrevocable trust named after a Colorado taxpayer. Back in the 1960s, the Crummey case revolutionized the way many types of irrevocable trusts are written. The IRS does not like the Crummey trust, and from time to time it challenges taxpayers who use such trusts. Most of the time taxpayers win, so Crummey trusts remain a popular estate planning tool.
Charitable trusts are another type of irrevocable trust created by people with a lot of money.
Charitable trusts come in lots of flavors, but the basic idea is that stock, real estate or other property is placed in a trust that partly benefits the person setting it up and partly benefits one or more charities. Charitable trusts are popular because they can eliminate lots of taxes and benefit the donor's favorite charity. It's merely a name lawyers give to certain trusts they create. One is a bypass trust created under a person's will or revocable trust. The other is an irrevocable Crummey trust created for one's children and grandchildren.