An irrevocable living trust is a trust set up during the lifetime of the grantor that cannot be changed once it is set up, reports Nolo. Irrevocable living trusts are commonly set up to reduce or eliminate taxes or protect assets from creditors, states About.com.
Irrevocable living trusts protect assets from taxes and creditors because the grantor no longer owns the assets once they are assigned to the trust, according to About.com. There are a number of types of irrevocable living trusts, reports Nolo. Bypass trusts transfer property to a trust when a first spouse dies, then the surviving spouse uses the property but does not own it. This allows the assets to bypass estate tax. Charitable lead trusts, charitable remainder trusts and pooled income trusts reduce estate and income taxes by designating a portion of the trust's income to be used by charity.
Qualified terminal interest property irrevocable living trusts transfer a first spouse's assets to the surviving spouse and delay payment of estate tax until after the death of the second spouse, as reported by Nolo. Generation-skipping trusts reduce payment of estate taxes while passing assets on to children and grandchildren. Life insurance trusts pass ownership of life insurance policies on to a trust to avoid payment of estate tax. Special needs trusts allow for extra financial support for those with special needs, but because the beneficiary does not own the assets, they do not jeopardize government benefit payments.