A trust allows an individual to transfer assets to a third party for the benefit of another.
Trusts can be revocable or irrevocable.
In a revocable trust the grantor may retain the right to control and receive income from the trust. In an irrevocable trust the grantor gives up control of property transferred to the trust. Assets in a revocable trust are considered to be part of the estate and subject to estate taxes because the grantor retains control of the assets in the trust. Irrevocable Trust A primary purpose for the creation of an irrevocable trust is to avoid death taxes on the transferred property. To avoid having life insurance proceeds included in the estate of the insured or a surviving spouse, it is imperative that the trustee, who is owner and beneficiary of the policy, not be obligated to lend money to or purchase assets from either estate.