What distinguishes an irrevocable trust from a revocable trust?

• A. The grantor cannot terminate the trust once created
• B. The grantor can terminate the irrevocable trust at any time
• C. It always pays taxes directly
• D. It requires no trustee

Answer: (A)

The key idea is control and revocability. An irrevocable trust is set up so the grantor relinquishes control over the assets; once funded, the grantor generally cannot terminate or amend the trust. The trust becomes the owner of the assets, managed by a trustee for the beneficiaries, often with separate tax treatment and stronger creditor protection. In contrast, a revocable trust stays under the grantor’s control—the grantor can modify or terminate it at any time, and the assets are typically treated as part of the grantor’s estate for tax purposes.

That makes the statement that the grantor cannot terminate the trust once created the best description of an irrevocable trust. The other options don’t fit: claiming the grantor can terminate an irrevocable trust at any time contradicts its defining feature; taxes and who pays them depend on the trust’s tax rules and distributions; and trusts always require a trustee, so saying no trustee is needed isn’t correct.