A living trust, also known as a family trust or revocable trust, is similar to a will in that both are used to transfer property to beneficiaries on death. However, a major difference – and one of the principal reasons why people choose to establish a living trust – is that a living trust is not subject to Probate.
Special Needs Trust
A special needs trust, also referred to as a supplemental needs trust, can be created as a stand alone trust or as a testamentary trust. It is designed to provide benefits to a beneficiary who is physically or mentally disabled, or who has a chronic or acquired illness, and is unable to maintain meaningful employment, all without affecting receipt of public benefits such as Medi-Cal.
Revocable v. Irrevocable Trusts
The two major types of trusts are revocable and irrevocable.
Revocable trusts remain amendable and subject to be revoked at the discretion of the creator (also known as the trustor). Revocable trusts usually convert to an irrevocable trust when the trustor dies.
An irrevocable trust is a trust that cannot be amended, changed or revoked. The trustor cannot be the beneficiary or retain control over the assets. Some people chose to create an irrevocable trust because they can mitigate estate tax liability and provide protection from creditor lawsuits. From a legal perspective, the trustor has given the assets away, however there are ways and techniques to maintain some control and input while holding onto the creditor and tax protections.