What are the types of trusts?
February 28, 2021
A trust can be a wonderful tool to include in your estate plan. It allows you to have a lot of control over your assets and the distribution of them. It can also protect you and your assets. Plus, a trust often will sail through probate quickly.
SmartAsset explains there are two main categories of trusts: testamentary and living.
Testamentary and living trusts
A testamentary trust is one that you put in your will and becomes active upon your death. A living trust is one you enact while you are alive.
Other types of trusts
If you have a living trust, it can be irrevocable or revocable. Irrevocable trusts become locked upon creation. You cannot make changes to it without approval from the beneficiaries, and the assets immediately become the property of the trust and are under the control of the trustee. A revocable trust does allow changes, the assets remain yours until you die and they allow more freedom.
You can also create a variety of special trusts. You could create a trust with rules on the disbursement of assets. For example, you could require a beneficiary to do something, such as graduate college, before he or she can access the trust assets. You can also create a trust for a specific use, such as one that will transfer to your favorite charity.
Trusts can allow you to set things up so that there is very little chance of anything going wrong once you die. Unlike a will, a trust has a certain legal standing that prevents contests and generally keeps you in complete control.