• Federal deposit insurance protects the assets in the irrevocable trust account.gold bank image by John Sfondilias from Fotolia.com
  
  An irrevocable trust is an asset which the grantor provides to an individual or charity that cannot be taken back. When a grantor creates a revocable trust and the grantor then dies, the trust is now irrevocable because the grantor cannot take it back. Like other trusts, the grantor can set conditions which are necessary for the beneficiary to withdraw money from the account. A trust is a type of gift from the grantor to a beneficiary or beneficiaries.
  
  

Deposit Insurance

• When an American bank holds an irrevocable trust account, the irrevocable trust account is eligible for Federal Deposit Insurance Corporation protection. This account may or may not be included in the total of the holder's $250,000 coverage limit for deposit insurance, depending on the type of irrevocable trust account. According to the FDIC, if an irrevocable trust was originally a revocable trust before the grantor died, the insurance regulations for a revocable trust may still apply to the account.
  
  

Testamentary Trust

• A testamentary trust is always an irrevocable trust. The trust is known as a testamentary trust because it is part of the grantor's last will and testament. The testamentary trust forms when the grantor of the trust dies, so the person who grants these items in a will cannot cancel the trust. According to the FDIC, a testamentary trust account is considered separately from the other assets of both the grantor and the beneficiary for the purposes of deposit insurance, which means that it does not count toward the $250,000 deposit insurance limit for the accounts an individual owns at a bank.
  
  

Gift Tax

• An irrevocable trust is subject to gift taxes. According to the Internal Revenue Service, if a grantor irrevocably transfers ownership of property to another person, this is considered a gift for tax purposes. When the beneficiary receives an asset, the beneficiary must file IRS Form 709 to report this gift income. If the grantor only irrevocably transfers control over part of the assets in the trust, the beneficiary is only liable for gift taxes on that portion.
  
  

Supplemental Security Income

• Donating assets to an irrevocable trust affects Supplemental Security Income eligibility. When the grantor creates a revocable trust, the Social Security Administration considers the grantor to have access to the money in the account. If the grantor creates an irrevocable trust, the grantor no longer has access to any money in the trust account. The Social Security Administration pays Supplemental Security Income benefits to individuals who own assets valued at less than the resource threshold value
  
  that this agency sets.