Irrevocable trusts have a number of specific applications, and can also be used for asset protection. Once assets are in the trust they will be outside the grantors control and can no longer be reclaimed. Assets in an irrevocable trust cannot be within the grantors control.
For an irrevocable trust to protect assets from creditors the grantor must relinquish control, beneficial interest, and avoid restrictions such as fraudulent transfer. The trust will be set aside if the grantor retains de facto control over the trust. In order to protect the trust from creditors, the grantor cannot manage the trust or have rights as a beneficiary otherwise assets in the trust may still be within reach of creditors.
An irrevocable trust can be utilized when you are creating an estate plan which gifts the assets of the trust to your beneficiaries. Even then, you must be certain you will not need the assets in the trust for future financial security. If you are sure you will not need the assets, the irrevocable trust is a great device to achieve the goal of distributing assets to your beneficiaries at a future time.
Whether you transfer your assets to the trust within your lifetime or upon your death, the one difference between a revocable and an irrevocable trust funded within your lifetime is that the revocable trust won't protect you as the grantor. Moreover, assets in your revocable trust are included in your taxable estate. Assets transferred to an irrevocable trust are excluded from your taxable estate after a statutory period.