When people think about trusts, the most commonly discussed option is a revocable living trust, which is often used as the foundation of a comprehensive estate plan. Revocable living trusts offer flexibility, probate avoidance, and continuity during incapacity. Because of their importance, revocable living trusts are discussed in detail in a separate article, which you can read here. Not sure if a trust is right for you? Take a look here to understand your options and help you decide.
Beyond revocable living trusts, there are many other types of trusts that may be used in estate planning for specific purposes, such as tax planning, asset protection, long-term care planning, or providing for unique family situations. The trusts discussed below represent some of the more common alternative to revocable living trusts, but this list is not all-inclusive. There are additional trust structures—such as charitable trusts, generation-skipping trusts, and other specialized trusts—that may be appropriate in less common circumstances. An estate planning attorney can help determine which type of trust best aligns with an individual’s goals and legal needs.
Check the end of this article for a quick comparison guide of the most common types of trusts.
Irrevocable Trusts
An irrevocable trust is a trust that can only be amended (changed) or revoked under strict qualifying circumstances once it has been created and funded. Such circumstances can be extremely difficult to achieve and sometimes may involve the courts. When assets are transferred into an irrevocable trust, the trust—not the individual—becomes the legal owner of those assets, and the acting Trustee retains full control over those assets.
Irrevocable trusts are commonly used for tax planning, asset protection, and long-term care planning. Because the trust owns the assets, they may be removed from the individual’s taxable estate and, in some cases, shielded from creditors or future claims. However, this loss of control is also the primary drawback—once assets are transferred, they typically cannot be taken back or redirected.
In certain situations, irrevocable trusts may be used as part of elder asset protection planning, particularly when someone anticipates the need to qualify for government benefits such as Medicaid for long-term care. These trusts are subject to strict rules and timing considerations.
Testamentary Trusts
A testamentary trust is created after death through a provision in a Last Will & Testament. Unlike a living trust, it does not exist during the individual’s lifetime.
Because a testamentary trust is created through a will, assets placed into the trust must go through probate before the trust is funded. This means testamentary trusts do not avoid probate and do not offer protection during incapacity.
Testamentary trusts are often used to control how and when beneficiaries—such as minor children—receive their inheritance. For example, distributions may be delayed until a beneficiary reaches a certain age or milestone.
Special Needs Trusts
A special needs trust is typically designed to benefit a person with a disability who receives—or may receive—means-tested government benefits such as Supplemental Security Income (SSI) or Medicaid.
These trusts allow assets to be held for the benefit of the individual without disqualifying them from government assistance, provided the trust is structured correctly. The trustee may use trust funds to supplement the beneficiary’s quality of life rather than replace public benefits.
Special needs trusts are often used by parents, grandparents, or other family members who want to provide support without jeopardizing eligibility for essential programs.
Pet Trusts
A pet trust allows individuals to set aside funds for the care and maintenance of their pets after death. Since pets cannot legally inherit property, a pet trust provides a mechanism to ensure that funds are used for veterinary care, food, grooming, and other needs.
A pet trust typically names a caretaker for the animal and a trustee to manage the funds. Instructions may include how long the trust should last and what happens to remaining funds if the pet passes away before the trust is exhausted.
Gun Trusts
A gun trust is a specialized trust used to hold and manage ownership of firearms. These trusts are often used to address compliance with state and federal regulations, provide for lawful transfer, and designate who may possess or use firearms.
Gun trusts may also help simplify transfers upon death or incapacity and can offer continuity of ownership while reducing the risk of unlawful possession.
A/B Trusts (Marital Trusts)
An A/B trust is a trust structure historically used by married couples to reduce or eliminate federal estate taxes. When the first spouse passes away, the trust divides into two separate trusts—commonly referred to as Trust A (Survivor’s Trust) and Trust B (Bypass or Family Trust).
This division allows each spouse’s federal estate tax exemption to be preserved rather than fully transferring all assets to the surviving spouse. While changes in federal estate tax laws have reduced the need for A/B trusts in many situations, they may still be appropriate in certain planning scenarios, particularly when estate tax exposure, blended families, or asset control concerns are present.
QTIP Trust (Qualified Terminable Interest Property Trust)
A QTIP trust is a type of trust commonly used in estate planning for married couples who want to provide financial support to a surviving spouse while also controlling how remaining assets are distributed after the surviving spouse’s death.
With a QTIP trust, the surviving spouse typically receives income from the trust during their lifetime, but the trust restricts the spouse’s ability to redirect the underlying assets. Upon the surviving spouse’s death, the remaining trust assets pass to beneficiaries selected by the original trust creator—often children from a prior marriage. QTIP trusts may also be used to take advantage of the federal marital deduction while preserving long-term distribution goals.
Real Estate Trusts
A real estate trust may be used to hold one or more properties for management, asset protection, or estate planning purposes. These trusts can simplify management, provide continuity upon death or incapacity, and help coordinate property transfers.
Real estate trusts are sometimes used alongside LLCs or other entities, depending on ownership structure and planning goals.
Important Considerations
Trusts can be powerful tools, but they are not one-size-fits-all solutions. Each trust type serves a different purpose, and the choice of trust should be based on individual goals, family dynamics, asset types, and long-term planning needs.
Trust Type Comparison Table
The table below provides a high-level comparison of common trust types. This comparison is intended to provide a general overview only. Trust selection depends on individual goals, assets, and legal considerations. A licensed estate planning attorney can help determine which trust structure is appropriate.
| Type of Trust | Created During Life? | Avoids Probate? | Can Be Changed? | Common Purpose |
|---|---|---|---|---|
| Revocable Living Trust | Yes | Yes (if properly funded) | Yes, while trustor is living and competent | Probate avoidance, incapacity planning, asset management |
| Irrevocable Trust | Yes | Yes (if funded) | No (with limited exceptions) | Asset protection, tax planning, long-term care planning |
| A/B Trust | Yes | Yes (if funded) | Limited after first spouse’s death | Preserve estate tax exemptions, marital planning |
| QTIP Trust | Yes | Yes (if funded) | Limited | Provide for spouse while controlling final distribution |
| Testamentary Trust | No (created at death) | No | No | Control inheritance timing for beneficiaries |
| Special Needs Trust | Yes or at death | Yes (if properly structured) | Limited | Preserve government benefits |
| Pet Trust | Yes or at death | Yes (if funded) | Depends on structure | Provide care for pets |
| Gun Trust | Yes | Yes (if funded) | Depends on structure | Firearm ownership and transfer compliance |
| Real Estate Trust | Yes | Yes (if funded) | Depends on structure | Property management and continuity |
Disclaimer: I am not an attorney, and the information above is for general informational purposes only. It should not be considered legal advice. For legal advice tailored to your situation, please consult a licensed attorney.