There are two main types of trusts to consider for estate planning: living trusts and testamentary trusts.
Living trusts are created and funded while you are still alive to make it easier to transfer property after your passing (e.g. your house, investments, a boat). Property passed through living trusts is not subject to probate, unlike the property in your will. This means that your assets will not be held up during the probate process, so the trustee can transfer those assets to beneficiaries whenever you decide.
For example, if you wish to hold the assets until a beneficiary reaches a certain age or gets married, the beneficiary will not receive those assets until that time.
Living trusts can be revocable or irrevocable. You can change or dissolve your revocable living trust after its creation. Irrevocable living trusts cannot be easily changed after creation. However, irrevocable trusts can be valuable when estate planning because they can diminish your tax liability.
A testamentary trust is created at your death with terms within your will. Testamentary trusts do not come into existence until after your will has been probated.
After your will is probated, selected assets passing through your will can go into the trust. Afterward, the testamentary trust functions like any other trust. You can determine how the assets within the trust should be managed, and how they are distributed within the terms of the trust. This helps give you control of the assets after your death.
Testamentary trusts are irrevocable and cannot be changed once created.