Most people have heard of trusts, but most people do not fully understand what a trust is or how it operates. There are many different types of trusts and trusts can be a useful tool in estate planning in order to protect loved ones, avoid probate, limit estate taxes or just as another way to distribute your assets. If you need a trust and/or the type of trust needed depends on your specific circumstances and preferences. Below is a list of the most common types of trusts and a short description of each (this list is in no way exhaustive):

Revocable Trust

This type of trust is, as the name suggests, revocable - meaning you can freely move assets in and out of the trust, change the named Trustee, serve as the Trustee yourself, revoke the trust and in general make any changes or modifications to the trust that you see fit. A revocable trust can be used in place of (but more likely) in conjunction with a Will (click here for a short explanation of the pros and cons of a Revocable Trust v. Will). This type of trust allows for alot of flexibility, but generally does not protect your assets from creditors nor does it avoid estate taxes.

Irrevocable Trust

This type of trust is irrevocable, meaning once it is created it cannot be revoked. Generally, once created you can continue to move assets into this trust, but cannot remove assets. Changes to this type of trust are very limited and it does not provide for must flexibility, but, generally, assets placed in this trust are not accessible to your creditors and also would not be included in your estate for estate tax calculations. 

Testamentary Trust

This is a trust that is created within a Will and generally only comes into play IF certain conditions are met. It is one of my favorite types of trusts because it is only created if necessary and is a good tool for planning in many circumstances. 

Special Needs Trust

This is a very specific trust that can be set up to care for an individual with special needs that is structured so that the beneficiary does not lose his/her eligibility for SSI or Medicaid benefits. 

QTIP Trust

This type of trust can be useful to help an individual avoid estate taxes, give assets/provide for a non-US citizen and or as an estate planning tool for mixed families (where one or both spouses have children from a previous relationship). 

Family LLC

This is not really a trust, but it is a mechanism that can be used to distribute wealth overtime in order to limit estate taxes and/or just to control the distribution of wealth.  

Charitable Trust

This is a special type of trust that is set up for charitable giving.