The Different Types of Revocable Living Trusts

By Beverly Bird

You can usually create a trust to match your personal needs and concerns. All fall into one of three categories, but within these categories, a great deal of variety exists. Trusts are either living or testamentary. Living trusts are created during your lifetime, not by the terms of your will after your death. Living trusts can be either revocable or irrevocable.

Revocable Trusts Become Irrevocable

A revocable trust is one that you can change or undo after you create it. When you form a revocable trust and transfer your assets into it, you would then typically act as trustee so you can continue to manage the assets. Forming an irrevocable trust means appointing someone else as trustee, as well as giving up control and the right to change your mind and dissolve the trust later. Additionally, a revocable trust automatically becomes irrevocable at your death, because you're no longer available to change it. At this point, all your trust's assets are immediately distributed to the beneficiaries you've named, or they're moved into other trusts designed for more long-term planning – as indicated in your original trust documents.

Providing for Children

If your primary concern is your children, you can direct that your assets go into trusts to provide for them when you die. The law generally doesn't permit children to manage their own funds and assets until they reach the age of majority, so if they inherit immediately at your death, the court will appoint a conservator to oversee these things for them. To avoid this, a minor's trust allows you to appoint a successor trustee – the person you appoint to take over for you at your death – to manage its assets for the benefit of your children. The trust may be run by someone of your own choosing until your children reach an age you specify, and does not necessarily have to be your state's age of majority. If your children are adults but fiscally irresponsible, you can create a spendthrift trust so your successor trustee metes out income to them in installments rather than all at once. Special needs trusts provide for dependents with disabilities. If a loved one is receiving need-based government assistance, she won't lose these benefits as she might by inheriting all at once.

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Providing for Your Spouse

A marital trust holds your property after your death while transferring any income it produces to your surviving spouse. When she dies, the trust can distribute its corpus – the assets you funded it with – to your children or other beneficiaries of your choosing. If your spouse has children from another relationship, this type of trust prevents your own children from having to share the fruits of your lifetime's labors with them. This can be particularly advantageous if you want to pass property you inherited to your children from a previous relationship. Marital trusts are sometimes called Q-TIP trusts, and several other varieties exist as well, so speak with an estate-planning professional to create one that meets your needs.

Giving to Charity

If you're the generous type, a variety of charitable trusts exist, but those that offer the most tax benefits are irrevocable during your lifetime. If you want to give to charity and if tax savings aren't an issue, you can set up your revocable trust to fund an irrevocable charitable trust when you die. You can arrange this so your charity receives a gift first, then your other beneficiaries take income later, or vice versa. This is a complicated area of estate law, so if you want to make sure you get it right and achieve the ultimate benefit, talk with a lawyer.

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Are Living Trusts Necessary?


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