There are two key differentiators among trusts. A trust must be either living or testamentary,
and it must be either revocable or
irrevocable.
Living trusts are those you establish while you are alive. Testamentary trusts are established by your will to hold assets that are included in your probate estate.
Revocable trusts can be changed or terminated at any time during your lifetime. So, for example, you might put certain assets into a revocable trust and later decide to gift them while you’re still alive. All that’s required to make the change is having the asset retitled in the name of the new owner. Terminating a revocable trust generally puts the assets back into your hands.
An irrevocable trust is generally permanent, which means you can’t modify the terms under any circumstances — though a
trustee
can resign and be replaced. So if you put assets in an irrevocable trust for transfer at your death, you no longer have the right to give them away in your lifetime or change the beneficiaries. An irrevocable trust usually can’t be terminated and there aren’t any ways to get the assets back short of going to court to try to have the trust declared invalid.
A living trust can be either revocable or irrevocable. A testamentary trust is revocable until the time of your death, when it becomes irrevocable.
