New York Law (NYLE) Practice Exam

Can an irrevocable trust created by a grantor be revoked at any time?

1. Yes, if the grantor feels it is necessary.

2. Yes, with the consent of the beneficiaries.

3. No, unless there is unanimous consent from all involved parties.

4. No, because irrevocable trusts cannot be revoked by their nature.

The correct answer is: No, because irrevocable trusts cannot be revoked by their nature.

An irrevocable trust is designed to be a permanent arrangement where the grantor relinquishes control over the trust assets. By definition, once a grantor creates an irrevocable trust, they cannot revoke or alter the terms of the trust without the consent of the beneficiaries or as allowed by the terms set forth within the trust document. This characteristic of permanence is fundamental to the concept of an irrevocable trust, distinguishing it from revocable trusts, where the grantor retains the ability to modify or dissolve the trust. The irrevocability serves essential purposes, including asset protection and estate tax benefits, as the assets moved into the trust are generally no longer considered part of the grantor's estate. As a result, the nature of an irrevocable trust inherently prevents the grantor from unilaterally revoking it at any time. Therefore, the answer that states irrevocable trusts cannot be revoked by their nature accurately reflects the legal standards surrounding such trusts.