Types of Trusts

Trusts are legal arrangements that allow individuals to protect and distribute their assets. There are many different types of trusts, each with their own unique benefits and requirements. Here are the five main types of trusts:

Revocable Trust

Also known as a living trust, a revocable trust is a trust that can be changed or revoked by the person who created it (the grantor) during their lifetime. The assets placed in a revocable trust are still considered part of the grantor’s estate for tax purposes. Revocable trusts are often used to avoid probate and maintain privacy.

Irrevocable Trust

An irrevocable trust is a trust that cannot be changed or revoked once it has been created. The assets placed in an irrevocable trust are no longer considered part of the grantor’s estate for tax purposes. Irrevocable trusts are often used for estate planning purposes and to protect assets from creditors.

Living Trust

A living trust is a type of trust that is created during the grantor’s lifetime. It can be either revocable or irrevocable and is used to manage and distribute assets while the grantor is alive and after their death. Living trusts are often used to avoid probate and maintain privacy.

Testamentary Trust

A testamentary trust is a type of trust that is created through a person’s will and takes effect after their death. Unlike a living trust, a testamentary trust can be changed or revoked up until the time of the grantor’s death. Testamentary trusts are often used to provide for minor children or to manage assets for beneficiaries who are not capable of managing them on their own.

Special Needs Trust

A special needs trust is a type of trust that is designed to provide for the needs of a person with a disability without affecting their eligibility for government benefits. Special needs trusts are often used to provide for long-term care, medical expenses, and other necessities.