What amount is the limit for an irrevocable trust?

The limit for an irrevocable trust is established at $15,000, which reflects the federal gift tax exclusion amount set by the IRS. This limit applies to individuals who wish to transfer assets into an irrevocable trust without incurring gift taxes.

The significance of this amount is that it allows individuals to contribute to the trust without exceeding the federal gift tax limits, thereby ensuring that the contributions are tax-free up to that threshold. An irrevocable trust, once established, cannot be altered or revoked without the consent of the beneficiaries, and one of its common uses is to manage and protect assets for future beneficiaries, often taking advantage of tax benefits as well.

In contrast, other amounts like $10,000, $20,000, and $25,000 do not align with the current federal gift tax exclusion limits, which could lead individuals to unintentionally incur gift taxes if they exceed the proper amount when funding the trust. Thus, the correct answer reflects the threshold that allows for tax-efficient gifting into an irrevocable trust.