Deed

• A deed is a contract that stipulates the terms under which a person or entity can transfer the right to land. In many cases, a bank will create a deed of trust in which it states that once the debtor, or person purchasing the property and whom owes money, has paid for the land in full, then the he shall own the land. Prior to this, he has the right to use the property under certain conditions and if he fails to pay, the bank can seize the land. If one party in the deed dies prior to the ending date of the contract, he can typically transfer his rights to another person unless the deed specifically states otherwise. To do such, he may use an irrevocable trust.
  
  

Irrevocable Trust

• An irrevocable trust is one that neither the trustee nor the grantor can change once the contract is in place. The grantor is the creator of the trust and generally the person that owns the property. The trustee is the person or organization that holds and administers the property per the wishes of the grantor. People often use irrevocable trusts to designate how beneficiaries receive assets, either during the grantor's life or after.
  
  

Purpose

• An irrevocable trust is beneficial for avoiding the estate tax in many cases. Since the property is held in trust, and not transferred immediately to an heir, this wealth transfer tax does not apply to the gross amount of the estate. To be successful, the trustee should not be related to the grantor. Rather than transferring the gross amount of the estate, the grantor can stipulate smaller distributions over a longer period of time. This may avoid the $5 million limit imposed by the IRS for 2011, thus avoiding the 35 percent estate tax.
  
  

Deed of Trust

• A deed of trust, also called a trust deed, is a different type of trust and not irrevocable. In some states, rather than issuing a mortgage contract, the lender will use a deed of trust. This basically stipulates the terms of the mortgage. The borrower does not hold the title to the land until it is fully paid off, but rather the trust holds the title. Once the mortgage is paid off, the title is transferred to the borrower.