There are many different types of trusts in trust law, each with its own specific purposes and characteristics. Some of the most common types of trusts include:
Living Trusts: Also known as inter vivos trusts, these trusts are created during the lifetime of the settlor and can be either revocable or irrevocable. Living trusts are often used for estate planning purposes, allowing assets to pass to beneficiaries without going through probate.
Testamentary Trusts: These trusts are created through a will and only come into existence upon the death of the testator. Testamentary trusts are often used to provide for minor children or to manage assets for beneficiaries who are not capable of managing them on their own.
Revocable Trusts: A revocable trust is a trust that the settlor can change or revoke during their lifetime. This type of trust is often used for estate planning purposes, as it allows the settlor to retain control over their assets while still avoiding probate.
Irrevocable Trusts: An irrevocable trust is a trust that cannot be changed or revoked once it has been created. This type of trust is often used for asset protection, as the assets held in the trust are no longer considered part of the settlor's estate.
Charitable Trusts: These trusts are set up to benefit charitable organisations or causes. Charitable trusts can be either revocable or irrevocable and can provide tax benefits to the settlor.
Spendthrift Trusts: A spendthrift trust is a type of trust that is designed to protect the assets held in the trust from the beneficiary's creditors. The trustee has discretion over when and how to distribute the assets to the beneficiary.
Special Needs Trusts: These trusts are set up to provide for the care and support of beneficiaries with disabilities or special needs. The assets held in the trust can be used to supplement government benefits without disqualifying the beneficiary from those benefits.
These are just a few examples of the different types of trusts that exist in trust law. Each type of trust has its own specific purposes and requirements, and it is important to consult with a knowledgeable attorney to determine which type of trust is best suited to your individual needs and circumstances.
You can learn more about this topic with our Equity and Trusts notes.