What is irrevocable trust

How is real estate handled?

Asked on February 1, 2017 under Estate Planning, Tennessee

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

An irrevocable trust is pretty much what it sounds like: a trust--which is a legal entity which can own and manage assets, including real estate--is set up and is *irrevocable*: that is, you cannot take back the assets or property or money you put into the trust, and it will remain the trust's. A corollary is that you can't control the trust, either: if you control it, it is considered still your property effectively. You set up the purpose and rules for the trust when you create it, and a trustee, who is not you or a spouse, etc., then controls the trust and everything in it. While the trustee should follow the rules, you can't directly stop him/her from doing what he/she wants with the property: you can sue him/her later for violating his/her "fiduciary duty" (duty of good faith, fidelity, honesty, etc.), but that may not help if the assets are wasted or misdirected or gone and the trustee doesn't have enough assets personally to compensate you for what happened. So you are literally *trusting* another with your property, under the assumption they will follow the rules laid down for them.
Real estate is handled like any other trust asset: it is transferred to, then owned by, the trust; or it is bought by the trust (e.g. as an investment) using money, etc. in the trust.


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