Irrevocable trusts can also be grantor trusts (or partial grantor trusts) and the grantor treated, for federal income tax purposes, as the owner of the trusts' assets.
Moving assets (cash or property) out of one's estate for federal income tax purposes is a complicated matter. Most trusts cannot accomplish that goal with the exception of IDGTs. However, removing the assets in that manner also has a downside which, basically, is the fact that the assets in the trust do not get a stepped up basis when the grantor dies.
A nongrantor trust must file a 1041 if it generates $600 or more in gross income OR any taxable income.
Estate planning can be very complex and trusts are only one tool in the planning toolbox (and not necessarily the best one for a host of purposes). A proper estate plan for an estate with not insubstantial assets requires consultation, in person, with a qualified professional.
