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A trust is a legal document that records a property owner's wishes for the distribution and management of his or her assets. Trusts differ from wills in that they allow the technical transfer of assets and properties while the original owner is still alive, keeping the document from entering probate when the owner dies. There are many different types of trusts that may be appropriate for different situations, including charitable, constructive, express, living, and irrevocable trusts. Negotiating these many different types of trusts is usually made simpler by the involvement of a trust lawyer, who can help ensure the legal veracity of the agreement.
Express trusts refer to types of trust that are created through the intentional action of the estate owner. Usually, intentional action is most simply defined as creating a legal document that specifies the grounds of the trust, though an oral agreement may sometimes be substituted. These differ from types of trusts that do not involve the intentional action of the owner, such as constructive trusts. Constructive trusts are created at the order of a court, and do not require the voluntary acquiescence of the estate holder.
Some people with assets want to ensure that their property or money goes toward benefiting the public or an important cause. Lead and remainder trusts are two different types of trusts that can be used to help create or finance a charitable enterprise. Lead trusts work by allowing the donor to retain control of his donated assets, while allowing a charity to benefit from them as well. Interest created by entrusted assets may go to the charity or may be split between the donor and the charity until the trust expires. Remainder trusts assign total control of entrusted assets to a charity for a specified amount of time. Both types of trusts typically allow donors access to tremendous tax breaks, which helps them retain income and interest that would otherwise be lost to taxes.
A living trust is one that begins while the estate holder is still alive. Many charitable trusts are living trusts, since estate owners may create them in order to personally benefit from the available tax deductions for charity. Living trusts help prevent estate probate, and may allow original estate owners to have a clear say in the dispensation of the trust. Trusts that are created by will to begin following the estate holder's death may cause legal complications if any items are disputed or unclear.
While some types of trusts have terms that can be renegotiated, an irrevocable trust does not. These trusts are generally immutable, and are a good way to set concrete guidelines. Both living and post-death trusts can be created as irrevocable.