A trust, which, by its terms, cannot be modified, amended, or revoked. For tax purposes an irrevocable trust can be treated as a simple, complex, or grantor trust, depending on the powers listed in the trust instrument.
A revocable trust is considered a grantor trust . State law and the trust instrument establish whether a trust is revocable or irrevocable. If the trust instrument is silent on revocability, then most states consider the trust revocable.
A reasonable period of settlement intervenes before a revocable trust that becomes irrevocable is considered a split-interest trust, in two situations:
- The trust becomes irrevocable upon the death of the decedent-grantor, or
- The trust was created by will, and the trustee is required to distribute all the net assets in trust or free of trust to both charitable and noncharitable beneficiaries.
After the settlement period, the trust is considered a split-interest trust or a charitable trust, whichever applies.
Reasonable period of settlement is that period reasonably required (or if shorter, actually required) by the trustee of a split-interest trust to perform the ordinary duties of administration necessary for the settlement of the trust. For example, these duties include the collection of assets, the payment of debts, taxes, and distributions, and the determination of the rights of the subsequent beneficiaries.
IRC § 676, State law