What are the different types of trusts?

A trust is a legal arrangement for holding and managing property for someone’s benefit. The person who creates it, called the settlor, sets the instructions. A trustee follows those instructions for the beneficiaries. The trust document matters, but the plan also depends on which assets are actually placed in the trust or otherwise coordinated with it.

A living trust is a trust created during your lifetime. It gives a trustee instructions for managing trust property and identifies who benefits from it. People often use “living trust” to mean a revocable trust, but a living trust can also be irrevocable. Its terms and funding determine how it works during your life and after your death.

A revocable trust is a trust the settlor can change or cancel during their lifetime, subject to its terms and applicable law. The settlor can generally direct how its assets are used and can take them back from the trustee. It can help provide for management during incapacity and a private transition after death when the assets and other parts of the estate plan are properly coordinated.

Funding a trust means transferring assets into it so the trustee can manage them under the trust’s instructions. The steps depend on the asset: a home may require a recorded deed, while a bank account or business interest requires a different form of transfer. Beneficiary designations also need review, but naming a beneficiary is not the same as transferring an asset into the trust.

A trustee is the person or group in charge of a trust. The trustee follows the trust instructions, takes care of the trust property, keeps records, pays bills when needed, and helps the people the trust is meant to support.