A Revocable Living Trust or a Family Trust is a legal document that holds title or ownership to your real property and assets. When you create a Revocable Living Trust you typical fund the trust by transferring the ownership of your assets to the trust. "Funding a Trust" (as it's called) is simply the process of transferring the name on accounts or property to the name of the trust. A Revocable Trust is by its very nature, revocable, thus you do not relinquish any control over the assets. and you may still buy, sell, borrow or transfer with those assets.
When assets are transfered into the Trust those assets will avoid probate since those assets are now controlled by the trustee of the Trust. You or your spouse can be the primary trustees (or co-trustees) receiving full control to buy, sell, borrow or transfer those assets. After you or you and your spouse pass, the Trust identifies the person or persons who will act as successor trustee(s). The Trust gives that person the right to manage all assets according to the provisions outlined in the Trust document.
In many respects a Revocable Trust is similar to a Will, it includes detailed instructions for how you want your estate to be handled at your death. However, unlike a Will a properly funded Trust can also be used to manage your assets during your lifetime, and for many generations there after.
An Irrevocable Living Trust can be identical to a revocable trust, with one significant difference; when you fund an Irrevocable Trust those assets are no longer yours. Funding an Irrevocable Trust can incur gift tax consequences because you are permanently transferring ownership of assets from your name into the name of the trust, and the trust's beneficiaries. Otherwise, an Irrevocable Trust can be drafted to accomplish all the same goals as a revocable trust. The primary benefit of using an Irrevocable Trust is that by transferring assets out of your own name, they are no longer part of your estate, and can be protected from creditors.
An MQT, or more commonly known as a Medicaid Disqualifying Trust, is a carefully drafted Irrevocable Trust which removes your assets from being considered when applying for Medicaid benefits. This trust can also protect assets from Medicaid recapture, and allows your to put aside assets for minor children, disabled adult children, or other loved ones. You may also protect the family home or other sentimental property from being sold to pay for your future medical bills.
A Special Needs Trust is a specially drafted trust that provides extra assistance for those that need it. Typically parents utilize these trusts to provide extra assistance for their disabled adult children, allowing them to have extra income without making them ineligible for public assistance. This trust is important for anyone with disabled children, allowing you to give to them, without giving an outright inheritance, thus causing them to lose their disability benefits.
A Marital Trust is typically used in conjunction with a Family Trust, and is created to maximize state and federal estate tax exemptions. This trust utilize the unlimited marital deduction to transfer assets from you, on death, to your surviving spouse, but only in the amounts that reduce your estate tax to the lowest possible amount. If you have significant assets that warrant a Marital Trust, it is in your best interests to have one established.
Asset Protection Trusts are complex irrevocable trusts, that transfer ownership of assets out of your name, but allow you to still have the full enjoyment from them. The benefit of these trusts is that you no longer own the assets, and they may not be attached or sold in the collection of any debts you have incurred (after the establishment of the trust).