What happens to irrevocable trust assets in terms of ownership and control?

• A. The grantor retains ownership for tax purposes
• B. The trust owns the assets for tax and asset protection purposes; the grantor loses control
• C. The assets revert to grantor upon any distribution
• D. The assets become public domain

Answer: (B)

When you set up an irrevocable trust, ownership of the assets moves away from the grantor and into the trust itself. The trust is treated as the owner for tax purposes and for asset protection, so the grantor generally loses control over the assets. A trustee manages the assets according to the trust terms, and distributions go to beneficiaries rather than back to the grantor, without restoring ownership to the grantor. The notion that the grantor retains ownership or that assets become public domain doesn't fit how irrevocable trusts operate.