An irrevocable trust is generally a trust that cannot be amended or revoked once it is created, with rare exceptions. It avoids probate and has the added benefit of allowing the trust creator to transfer assets to beneficiaries weeks, months or even years after the trust creator, or settlor, dies. Irrevocable trusts can be living trusts, irrevocable life insurance trusts that hold life insurance policies, charitable trusts, and others.
One advantage of an irrevocable trust is privacy. The trust and its various provisions never become a matter of public record, because the irrevocable trust is not subject to probate. In contrast, if you use a Will only, it must be filed with the Orphans Court in Pennsylvania to open probate. At that point, it becomes a document that anyone can have access to and read.
A key difference between a revocable and an irrevocable trust is that with a revocable trust the settlor remains the owner and can modify or revoke the trust at any time. The settlor has full access to the assets in the trust up to the time of death. With an irrevocable trust, the settlor cannot get the property back that was put into the irrevocable trust.
Using an irrevocable trust may make sense for someone who is in a profession that puts you at risk for lawsuits. You give up control of those assets that you put in the irrevocable trust. You cannot get that property back, and the assets in the trust are protected from creditors and judgment holders. One caveat, however, is that you cannot create an irrevocable trust to protect assets if you are currently being sued, or if an event occurred in which you may be sued. The protection that the irrevocable trust affords can be overturned if it can be proven that you created in in contemplation of an event.
The tax treatment of an irrevocable trust is different from a revocable trust as well. The trust itself pays taxes on income that assets held in the trust produce. The trust therefore has its own tax identification number, and the trustee files income taxes for the trust. Those assets are also not subject to Pennsylvania inheritance tax when the trust settlor dies. It may be good planning to create an irrevocable trust and fund it with assets that are likely to have a high appreciation in the future.