There are several major kinds of trusts.

    These include Special Needs Trusts and Supplemental Needs Trusts (sometimes called SNT Trusts).

    They also include Revocable Living Trusts (which are perhaps the most common kinds of trusts).

    There are various specialized trusts that are designed to avoid estate taxes, which can also be useful.

    An interesting hybrid approach combining both Wills and trusts is sometimes called a Testamentary Trust.


    A Special Needs Trust can be very useful when a child or other beneficiary receives government benefits, such as Medicaid.  With a Special (or Supplemental) Needs Trust, a parent, grandparent, or other person can provide benefits and luxuries that would not otherwise be available to a person receiving Medicaid or certain other government benefits.

    This money would generally be lost if the money were left outright to the special needs person.

    This money would also generally be lost if left in an ordinary trust, in which the trustee had the discretion to provide care or even housing for the special needs person.


    Revocable Living Trusts are the most common trusts that people think of when considering estate planning.

    Sometimes these are also called Family Trusts, or Disclaimer Trusts, or A-B Trusts.

    In a situation where there are fairly simple tax avoidance goals, a  Family Trust/Disclaimer Trust/or A-B Trust can preserve the estate tax unified credits (often called the estate tax exemption) of both spouses.

    This can double the amount that can pass without any estate tax when both spouses die.

    Another benefit of a Revocable Living Trust is that it can be used to achieve other goals.
    
    Sometimes these goals include the goal of preserving assets for the children of each spouse, when there is a later marriage, and there are “his children,” and “her children.”

    Even without these two possible benefits of estate tax avoidance and/or control from beyond the grave (to be sure that the surviving spouse does not cut out the children of the first spouse to die), revocable living trusts can have value.

    One of these values is the ability for someone else (a successor trustee) to handle the financial affairs of the person with the trust when that person can no longer handle his or her own affairs.
    
    These trusts also can greatly simplify the passing on of wealth after the person dies, as these trusts can often be used to bypass probate.

    Revocable Living Trusts, Family Trusts, Disclaimer Trusts and A-B Trusts can create certain problems, however.  Often times, they can produce very unfortunate results in a Medicaid situation, when assets can be trapped, and can be required to be spent before one spouse qualifies for Medicaid, when a more appropriate trust could save significantly more assets for the spouse who does not need long term care.

    A skilled elder law attorney can help with ensuring that the right kind of trust is selected, to avoid this problem.


    Another kind of trust is sometimes called a Testamentary Trust.

    A Testamentary Trust is a trust that is only funded after a person dies.  In such a situation, there is a Will based estate plan.

    Testamentary Trusts are often particularly useful for the parents of small children.

    Such people are generally young.  Often a complex estate tax avoidance plan is inappropriate for young parents.

    Nonetheless, if there is a terrible accident, and the parents both die, it would often be best if life insurance and other assets did not go directly to the children.

    In some cases, parents may also want to extend the time before their children receive control over significant sums of money.  Sometimes it can be wise to protect money from being given outright to an 18 year old, for instance.

    In such situations, a Testamentary Trust can be useful.

    With a Will that includes a Testamentary Trust clause, the money can be given directly to the beneficiaries (children), if they have reached a certain age, but if they are below that age, the money can be instead put into a trust for the children’s benefit.  This money is generally used for things that the parents approve of, at the discretion of a trustee, until the children reach a certain age, at which time the remaining money can then be released to the children.