Have you considered that trusts may be best understood comparatively? Two broad columns of trusts are revocable and irrevocable. With very few exceptions, irrevocable trusts cannot be changed after they have been created, while revocable trusts can be restated as often as the grantor wishes. 

Another axis for understanding trusts may be the type of beneficiary. A pot trust is a common trust for a group of beneficiaries who share the benefits of a trust. This can be a common type of trust for families with young children, as many of the expenses of the trust will benefit all of the children, like remodeling the home so children do not share rooms, and allow for the money to flow more easily when one child’s needs become greater; for example, if one needs orthodontia but the other does not. Single beneficiary trusts are more common for older children or adult beneficiaries. 

Another type of beneficiary is a short-term beneficiary. For example, in a Qualified Terminal Interest Property Trust, the trust owns the house that was owned by only one spouse, but where both spouses lived after marrying. The new spouse is the beneficiary, and retains the ability to continue living in the house until he or she passes. Upon the death of the second or new spouse, the trust terminates, and the home is inherited by the original owner’s heirs, and not the heirs of the new spouse. 

Trusts can also be sorted by their relative tax benefits. There is no tax benefit to a revocable trust. The grantors or trustees must still pay tax on the assets as if they owned them, and the assets will be included in their estate for estate tax purposes. Irrevocable trusts, however, are usually created to save income tax, estate tax, or both. It can also protect assets from creditors, and sometimes contains spendthrift clauses to prevent a beneficiary from “wasting” the money from the trust. 

For more information about trusts and the role they can play in estate planning, please reach out to our office to schedule an appointment. We do telephone, computer, and face-to-face appointments. Our face-to-face appointments are held outside in the open air (frequently selected by clients for document signing) and inside our office conference room. We follow all CDC guidelines. Our office procedures and COVID-19 safety protocols are designed and enhanced by medical review and air quality engineering and design.