Types of trust, and what each is for

The common one. Set up while you are alive, and you can change or cancel it at any time — usually you are your own trustee, and life carries on as normal. On death it passes to whoever you named, without probate, privately. It also covers incapacity: your named successor trustee simply takes over.

Because you keep control, it does not shelter assets from estate tax or creditors.

You give the assets away for good and cannot take them back. That loss of control is the point: the assets may sit outside your taxable estate and beyond the reach of creditors. Used for estate-tax planning and asset protection, and not to be entered into casually.

Created by your will, so it only comes into being after you die — and it does go through probate. Typically used to hold money for children until they reach an age you choose, rather than handing a lump sum to an eighteen-year-old.

Provides for someone with a disability without disqualifying them from means-tested benefits. Leaving money to that person directly can cost them their support, which is precisely the harm this exists to prevent. Specialist advice is essential here.

Gives to a cause, often with a tax benefit, and some forms pay an income to you or your family for a period before the remainder goes to the charity.

An unfunded trust does nothing. Setting one up is only half the job — the accounts and property have to actually be transferred into it. Families routinely discover a trust that was drawn up, paid for, and never funded, so everything went through probate anyway. If you have one, check what is actually in it.