I find that people are often confused about trusts, so here is some basic information that I hope you will find helpful.
This type of trust is set up by the Grantors (owners) during their lifetime, who then serve as Trustees of their own Living Trust. Because it is revocable and amendable, it offers no asset protection to its owners. It is a good option for clients to consider in place of a basic will-based estate plan if the client is concerned about avoiding the cost of probate, maintaining privacy of what is being left to heirs, and/or the client owns real estate outside of Texas. (If someone owns real estate outside of Texas and dies with only a will, the Texas Probate Court has no authority to deal with property in another state. That means your will would have to be probated in Texas and then have an ancillary probate process in the other state where the real estate sits. A Revocable Living Trust can help you avoid this need for an ancillary probate, but only if you properly fund your trust.)
A Testamentary Trust is a trust that springs into existence upon the death of its creator (Grantor) through provisions in a Will or Revocable Living Trust. A Testamentary Trust does offer asset protection to its beneficiary. A Testamentary Trust is created at the death of the Grantor and can be a good idea for a number of reasons. If the beneficiary would blow the money, you should consider leaving it to your beneficiary in trust and have someone else serve as Trustee. Even a successful beneficiary could be a target of a lawsuit at some point due to wealth or profession, so you should consider leaving the inheritance in trust so that it is protected from a potential lawsuit.
We live in a lawsuit-friendly country. Even someone you may consider a friend could decide to threaten you with a lawsuit if you inherited enough and they were desperate enough. The same can happen to our children.
A Special Needs Trust can be created as an irrevocable trust during a Grantor’s lifetime or in the Grantor’s Will or Revocable Living Trust as a Testamentary Trust. If you know a beneficiary has special needs, you will want to make sure that inheriting assets from you does not disqualify the beneficiary from governmental assistance.
A Grantor can establish an Irrevocable Trust for a beneficiary to set aside assets for a variety of reasons. Perhaps a grandparent wants to fund a trust with annual gifts up to the gift tax exclusion to get those assets out of his/her estate and let them grow for the grandchild to be used later for college. To set up an irrevocable trust during the Grantor’s lifetime, the Grantor has to make someone else Trustee and give up all real control of the assets that are being gifted.
There are many other types of trust, but this should give you an idea of some basic types. You should speak with an attorney to see what, if any, trust makes the most sense for your situation.