There are many different kinds of trusts which have differing purposes. Some examples include:
Special Needs Trusts: Usually this type of trust is designed to benefit a disabled person who is receiving government benefits (like Medi-Cal). The purpose of the trust is to benefit the person without jeopardizing their current or future government benefits.
Discretionary Trust (aka “Spendthrift Trust”): The purpose of this trust is to benefit a person without enabling that person to squander the trust funds, or lose the funds to a creditor.
Irrevocable Trust: A person can create an irrevocable trust to minimize or eliminate federal estate taxes. When properly drafted, the assets in an irrevocable trust (including life insurance proceeds) would not be taxed in the settlor’s estate.
