While the purpose of each trust is designed to meet the specific needs of a person or family, there are characteristics common to all trusts. For example, each trust involves an interest in property that is held for the benefit of another. Notwithstanding certain elements common to all trusts, there are several different types of trusts. Trusts generally fall into one of two categories: revocable and irrevocable.
A revocable trust is one where the settlor, whose property was transferred to the trust, retains the right to revoke the trust during his or her lifetime. To revoke a trust means to cancel the trust and retake ownership of the property. If a revocable trust has not been revoked by the settlor, the trust may become irrevocable at death.
An irrevocable trust is created when property that has been transferred to trustee cannot be revoked. According to the laws governing trusts in California, an irrevocable trust may be terminated under some circumstances. For example, if all the beneficiaries of an irrevocable trust agree that the trust should be terminated, they may petition the court to compel the termination and distribution of trust property.
Trusts may also be mandatory or discretionary with respect to distribution of the principal and income of the trust. A mandatory trust usually contains provisions that specify when and under what circumstances a beneficiary may require disbursements of trust earnings or principal. These circumstances usually comply with some standard for support. A discretionary trust, on the other hand, usually grants the trustee full power and authority to make distributions as the trustee deems most appropriate.
Other trusts are designed to comply with federal laws. Some beneficiaries who require additional support may also need qualify for federal benefits, such as Medicaid and Social Security Income.
This information is not comprehensive and should not be interpreted as legal advice. It is intended to provide only general information about trusts.