Types of Trusts

Trusts come in many different forms. Each type is built for a specific purpose. Here is a simple breakdown of the most common trust types so you can understand what each one does and when you might use it.

Revocable Living Trust

A revocable living trust is created while you are alive and can be changed or cancelled at any time. You stay in control of your assets, and they avoid probate when you die. This is the most common type of trust because it is flexible and easy to manage. It also provides a seamless transition if you become incapacitated, since your successor trustee can step in immediately.

Best for: People who want to avoid probate, keep things private, and maintain control over their assets during their lifetime.

Irrevocable Trust

An irrevocable trust is permanent. Once you put assets into it, you generally cannot take them back or change the terms. Because you give up control, the assets are protected from creditors and may not count toward your estate for tax purposes. This type of trust is commonly used for estate tax planning, wealth transfer, and asset protection.

Best for: People with larger estates, those who need asset protection, or anyone who wants to permanently remove assets from their personal estate.

Asset Protection Trust

An asset protection trust is specifically designed to shield your wealth from lawsuits, creditors, and other financial risks. Assets placed in this type of trust are held by a trustee and are no longer directly owned by you, making them harder for others to claim. These trusts must be set up before any legal trouble arises, not after.

Best for: Business owners, professionals in high-risk fields, and anyone who wants to proactively protect their wealth from future claims.

Charitable Trust

A charitable trust benefits a charity or cause rather than individual people. It can provide income to family members for a period of time before the remaining assets go to a charitable organization. These trusts can also provide tax benefits to the person who creates them.

Best for: People who want to support a cause they care about while also planning their estate in a tax-efficient way.

Dynasty Trust

A dynasty trust is built to last for many generations. Instead of distributing assets to one generation and ending, it preserves wealth for children, grandchildren, and beyond. A dynasty trust can provide financial support to multiple generations while keeping the assets protected and managed under one set of rules.

Best for: Families who want to preserve wealth across multiple generations and create a long-term family legacy.

Special Needs Trust

A special needs trust is set up to provide for a person with disabilities without disqualifying them from government benefits like Medicaid or Supplemental Security Income (SSI). The trust can pay for things like medical expenses, education, and quality-of-life improvements without affecting the beneficiary's eligibility for public assistance.

Best for: Families who have a loved one with a disability and want to provide extra support without risking their government benefits.

Testamentary Trust

A testamentary trust is created through your will and only goes into effect after you die. It does not exist while you are alive, so it cannot help with incapacity planning or probate avoidance during your lifetime. However, it gives you control over how assets are distributed after death, which can be useful for protecting young children or managing distributions over time.

Best for: People who want to control how their assets are distributed after death, especially for minor children or beneficiaries who need managed support.

Custom Trust

TrustForge also supports custom trusts. If your needs do not fit neatly into one of the standard categories, you can build a trust from scratch using the clause editor. The editor includes 40+ template variables across 6 categories, giving you the flexibility to create exactly the trust structure you need.

Best for: People with unique family situations, complex asset structures, or specific planning goals that require a tailored approach.

Choosing the Right Trust

The right trust depends on your goals:

• Want flexibility and control? Start with a Revocable Living Trust.
• Need asset protection or tax benefits? Consider an Irrevocable Trust or Asset Protection Trust.
• Want to support a cause? Look at a Charitable Trust.
• Want to preserve wealth for generations? A Dynasty Trust may be the answer.
• Have a loved one with special needs? A Special Needs Trust protects their benefits.
• Want to control distributions after death? A Testamentary Trust gives you that power.
• Have unique needs? Build a Custom Trust.