REVOCABLE TRUST – A revocable trust is a trust whereby provisions can be altered or canceled dependent on the grantor. During the life of the trust, income earned is distributed to the grantor, and only after death does property transfer to the beneficiaries. This kind of trust is often used for real estate. You transfer the title to your house into the trust, and then the house doesn’t need to go through probate court when you pass away.
IRREVOCABLE TRUST – An irrevocable trust is a type of trust where its terms cannot be modified, amended or terminated without the permission of the grantor’s named beneficiary or beneficiaries. Irrevocable trusts offer tax-shelter benefits that revocable trusts to do not. The main downside to an irrevocable trust is simple: It’s not revocable or changeable. You no longer own the assets you’ve placed into the trust. In other words, if you place a million dollars in an irrevocable trust for your child and want to change your mind a few years later, you’re out of luck. This kind of trust is often utilized when you are planning for someone that is going to need government benefits.
SPECIAL NEEDS TRUST – A special needs trust is a trust tailored to a person with special needs that is designed to manage assets for that person’s benefit while not compromising access to important government benefits. There are three main types of special needs trusts: the first-party trust, the third-party trust, and the pooled trust. If you are a parent looking to place assets into a trust to help provide for a disabled person, but do not wish to mess up the government benefits such as SSI, you would set up a third-party trust.
Setting up this kind of trust for a disabled loved one will help them in a manner where they can continue to receive their government benefits while your trust funds also aid them with certain kinds of needs. There are specific rules, so plan this out wisely with a lawyer.