An irrevocable trust cannot be changed after you sign it, unlike a revocable trust. Once assets go in, you no longer own them and the trust becomes its own taxable entity. People use them to avoid estate taxes, protect money from creditors or lawsuits, shield assets from addiction or divorce, and qualify for Medicaid.
An irrevocable trust is really just a trust that cannot be changed or altered after you sign the document. Once you sign it, it's a done deal for the most part. A revocable trust, on the other hand, can be changed or altered at any time. The only time a revocable trust becomes unchangeable is when the person who made it dies. And here is the huge difference with an irrevocable trust. Once you create it and you put the asset in it, you completely lose control of that asset. It's no longer yours, it belongs to the trust and the trustee manages it. The trust becomes its own taxable entity, it pays its own taxes. An irrevocable trust is typically used to avoid estate taxes for those people who have estates large enough to worry about that. It also is used to preserve assets so they won't be misused by somebody who might have addiction problems or might get sued or has creditor problems, also protects it from an ex-spouse, and also it can be used to protect assets from Medicaid.
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