The revocable trust is a legal tool commonly used to prepare for death or incapacity. In a Connecticut revocable trust, you, the settlor, create and execute a legal document that transfers your property to a second party, a trustee. Once the transfer is complete, the trustee has a legal duty to manage and preserve the property in the interests of a third party, the beneficiary, whom you've named in the trust document. Unlike a testamentary trust, which won't take effect until you die, a revocable trust takes effect during your lifetime and carries the right to revoke or end it at any time before your death. In a revocable trust, you also have the power to name yourself as trustee; thus, keeping technical control of your property during your lifetime. However, a revocable trust often includes the name of a successor trustee, someone who becomes trustee if you die, become legally incapacitated or are otherwise removed.
Revocable Trust Benefits
There are several benefits to a Connecticut revocable trust. Connecticut doesn't follow the Uniform Probate Code, which simplifies the probate process, so going through probate in Connecticut remains relatively complicated. However, since the transfer of property into a revocable trust is a lifetime transfer, not a transfer at death, it is not subject to probate. For the same reason, a revocable trust may allow you to avoid certain estate taxes. If you are still alive but become mentally incapacitated, the trust can pass to your successor trustee, allowing her to manage the property while you cannot.
Special Needs Trusts
Special needs trusts allow for management of property for the benefit of a person with special needs, without interfering with that person's ability to receive government benefits (for instance, Medicaid or Medicare) for his condition. In structure, a special needs trust is very similar to a revocable trust. Connecticut offers three forms of special needs trust: a first-party trust, funded with property that belongs to the person with special needs; a third-party trust, funded by a third-party who wishes her assets to be used for the benefit of the special needs individual; and the pooled trust, which is essentially charitable in nature and run by a nonprofit. In a pooled trust, the trust is funded with property from multiple special needs beneficiaries, who have "pooled" their resources together, for investment by the nonprofit.
Both revocable and special needs trusts allow one party to use his property for the benefit of another party; however, special needs trusts are much more specific since they are designed to serve a specific class of beneficiaries. Revocable trusts offer much more opportunity for the settlor to retain control of his assets during the life of the trust. Special needs trusts, particularly the first-party and pooled trusts, are built on the assumption that the special needs individual may have difficulty managing his own property.