Property OwnershipIntermediateDelaware Exam

What is an 'irrevocable trust' and how does it affect Delaware real estate ownership?

AA trust that cannot be changed after establishment; assets are permanently transferred out of the grantor's estate for tax and asset protection purposesCorrect

BAny trust created by court order

CA trust where the trustee's decisions are irrevocable

DA trust that always transfers its property only after the original grantor's eventual death, and never before, as is typically expected in this situation

Why A trust that cannot be changed after establishment; assets are permanently transferred out of the grantor's estate for tax and asset protection purposes Is Correct

Answer A: A trust that cannot be changed after establishment; assets are permanently transferred out of the grantor's estate for tax and asset protection purposes

An irrevocable trust cannot be modified or revoked after establishment. Assets transferred to an irrevocable trust are removed from the grantor's taxable estate, which may provide estate tax benefits and asset protection but means the grantor loses control over the assets.

Exam Tip: Property Ownership

Property ownership questions test the bundle of rights and different forms of ownership. Know the differences between joint tenancy, tenancy in common, and community property, including the right of survivorship.

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Key Terms to Know

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

Chain of Title

The sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.

Deed of Trust

A security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.

Easement

A non-possessory right to use another person's land for a specific purpose.