A Trust is an arrangement where one person, called a trustee, holds legal title to property for another person, called a beneficiary.
Created within a last will and testament, a testamentary trust does not take effect until the death of the testator (the person who created the will). A testamentary trust can be amended or revoked by updating the will. For example, a will might include a testamentary trust for your minor children specifying at what age the children will have direct access to the funds and who will manage them while the children are still below that age.
Revocable Living Trust
A trust that can be amended or terminated by the Trust's creator during their life. Assets that are titled to a trust do not have to go through Probate upon your death. Revocable Living Trusts are a common estate planning tool for avoiding probate. A Revocable Living Trust may also leave things to your beneficiaries protected in the event that your spouse remarries, and it may protect your beneficiaries from future lawsuits, creditors, or divorce.
A trust that may not be amended or terminated after it is created—or at the very least, some part of the trust terms cannot be amended or terminated. In some Irrevocable Trusts, the Grantor, (person that created the trust), may have retained some limited powers, such as the power to change who the final beneficiaries of the trust will be when the Grantor dies or the power to change the Trustee. Irrevocable trusts may be used for asset protection planning, long-term care planning, or tax planning.