What are the different types of trusts and how do they work?

Trusts are a type of estate planning tool used to hold and manage property for the benefit of individuals or organizations. In Massachusetts, the different types of trusts are revocable living trusts, irrevocable trusts, testamentary trusts, special needs trusts, marital trusts, and charitable trusts. A revocable living trust is a trust that can be changed or modified while the trustmaker, also known as the grantor, is alive. The trustmaker can add, remove or alter any of the trust’s terms and provisions. When the grantor dies, the trust becomes irrevocable and can no longer be modified. An irrevocable trust is a trust that can’t be changed, modified or revoked. This type of trust is typically used to avoid or reduce estate taxes, invest and manage assets, or to protect assets from creditors. A testamentary trust is created in a will and takes effect after the trustmaker’s death. This type of trust can provide for the care of minors or adults who are unable to care for themselves. A special needs trust is created for the benefit of a disabled person and is designed to provide for the person’s care without disqualifying them from government benefits. A marital trust is set up for the benefit of a spouse and is funded with assets that may be subject to federal estate taxes. A charitable trust is a trust that is created for the purpose of providing for a charitable organization or cause. The trustmaker, or grantor, will specify the terms and conditions of the trust in terms of how the funds are to be used to benefit the charitable cause.

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What are the different types of trusts and how do they work?

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