An irrevocable trust cannot be changed by the settlor once it is created. However, if the settlor is also a beneficiary of the trust, the IRS may treat it as a revocable inter vivos trust and the income generated by the trust will be taxed at the settlor's personal income tax rate.

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An Irrevocable Trust

Question 88

Multiple Choice

An irrevocable trust

A) can be changed by the settlor to add another child as a beneficiary.
B) is not very useful for property because the deed needs to be changed.
C) cannot be used for investments because it is taxed at the highest rate.
D) will be treated as a revocable inter vivos trust if the settlor is a beneficiary.

Correct Answer: