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How To File An Irrevocable Trust With The IRS

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The Irrevocable Trust is becoming a popular way for families to protect their assets from seizure by creditors. People have accumulated more wealth than ever before while also accumulating record debt levels. Here is how to file an Irrevocable Trust with the Internal Revenue Service (IRS.)

The Trust That Cannot Be Modified

The Irrevocable Trust is an estate planning mechanism aimed at protecting assets and reducing tax liabilities. The IRS (Publication 1635) defines the Irrevocable Trust as a “trust, which, by its terms, cannot be modified, amended, or revoked. For tax purposes, an irrevocable trust can be treated as a simple, complex, or grantor trust, depending on the powers listed in the trust instrument.” Many banks have been successful in using the courts to go after debtors with high levels of bad debt. The Irrevocable Trust has key advantages because creditors cannot legally access the money.

The Irrevocable Trust is created by the original owner (or Grantor) ceding the use and income benefits of an asset from himself to the beneficiary of the trust. Usually, this is done from a parent to a child, but a grandchild or nephew can also be the beneficiary. Setting up the trust reduces the income tax liability of the original owner while ensuring that the beneficiary receives the assets in question.

IRS Form for Irrevocable Trust

There are many requirements for filing an Irrevocable Trust with the IRS. The Trustee must fill out Form SS-4 to acquire a federal employer identification number (FEIN). The legal name of the trust, the Trustee name and address must be given to the IRS.

Next, the Trustee should file the Form 1041 – “U.S. Income Tax Return for Estates and Trusts” with the IRS – if the Irrevocable Trust has more than $600 in taxable income generated annually. The Trustee must calculate the expected annual income tax liability of the trust. Also, filing the Schedule K-1 (a list of the distribution of income to beneficiaries) is also required.

Income can be shifted to the Irrevocable Trust to avoid high estate taxes. The owner of the Irrevocable Trust has no power to amend the stipulations that govern the trust. The owner of the Irrevocable Trust can also be the Trustee, but cannot have any extra powers or authority beyond standard administration of said trust.


This article contains general legal information but does not constitute professional legal advice for your particular situation. The Law Dictionary is not a law firm, and this page does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

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