Reasons for choosing an irrevocable trust
Irrevocable trusts are generally established in an effort to avoid or reduce taxes. Since the assets in the trust are no longer considered your property, you are not responsible for paying taxes on those assets.
Control of assets in the trust
Putting assets into an irrevocable living trust  can be understood as giving the assets to someone else (the trustees  of the trust) to manage. In addition, you (the grantor) forfeit any rights to the control or management of the assets, including the right to sell, give away, invest, or otherwise manage the property in the trust. Essentially, the assets in an irrevocable trust no longer belongs to you.
Control of terms of the trust
Under an irrevocable living trust, you give up all rights to control the terms and conditions of the trust after the trust is initially established. This means that you cannot change the beneficiaries  of the trust or the terms or conditions under which beneficiaries will receive the property in the trust. In addition, you cannot revoke or terminate the trust without the consent of the trust's beneficiaries and trustees.
As with transferring assets to another person, any assets transferred to an irrevocable living trust are subject to federal gift tax—that is, the transfer of property is treated as a gift and is therefore subject to the gift tax. (The 2013 annual gift tax exclusion is $14,000, which means that up to $14,000 in assets may be transferred to the trust tax-free. Any assets in excess of $14,000 will be taxed through the United States Gift (and Generation-Skipping Transfer) Tax Return (Form 709) .)
However, when you put your property into the trust, you are essentially giving up all rights to that property. Since you've given up the rights to the property, you are no longer the owner of the property in the trust. This means that the property in the trust cannot be counted among your estate, and therefore you do not have to pay estate taxes on that property.
How irrevocable trusts protect assets
Irrevocable trusts are often established in order to protect assets when the beneficiary of the trust is under 18 years old (a minor), a person with a disability, or a financially irresponsible adult. There are a number of specific irrevocable trusts (specifically a Spendthrift Trust and a Special Needs Trust) that are designed to distribute funds according to the schedule specified in the trust, while keeping the remaining funds in the trust inaccessible to the beneficiary, the beneficiary’s creditors, or the beneficiary’s caretakers. If you'd like to set up a trust of this nature, it's best to meet with a trust and estate attorney.
How irrevocable trusts avoid or reduce estate taxes
When a person with a significant amount of assets dies and transfers those assets to others, either through a will or through the laws of intestacy, the assets that are transferred are subject to a federal estate tax. Estate tax returns are required of all estates with a value of over $5,000,000. By transferring property to an irrevocable trust, the property is no longer considered an asset of the person who died, and thus cannot be counted toward the deceased’s taxable estate.
Using irrevocable trusts in Medicaid planning
Irrevocable trusts can also be established in preparation for applying for Medicaid benefits, specifically for long-term care  benefits. As long-term care can be very expensive, it may be beneficial for some people to put the bulk of their assets into an irrevocable trust (at which point those assets are no longer accounted as part of their estate) so that they have a smaller net worth, which will qualify them for long-term care Medicaid benefits. Depending on the state in which you live and the laws of that state, the rules and requirements around using irrevocable trusts in Medicaid planning can vary. If you’re thinking about using irrevocable trusts in Medicaid planning, please consult a trust and estate attorney.
To learn about revocable trusts, see our article Revocable Trusts .