A friend told me they have a different kind of trust. Do I need that?

When learning about estate plans, you may hear about a few different types of trusts, and other documents that may be necessary. Depending on your assets, you might need one of the trusts/documents below, but your lawyer will help guide you on whether they would be useful for your situation. For an overview, here are some basic definitions:

Living trust: A living trust is a trust established while you are still alive, that contains any assets that you wish to transfer into that trust. You can be the trustee of your living trust. The advantage of a living trust is that upon your death, the trustee of the trust can simply be changed to your spouse or children, and the trust will not have to go through probate. California residents often have living trusts because probate is an onerous process there. Probate in Washington State is simpler, so living trusts are not as common here.

Disclaimer trust: A disclaimer trust is established in a donor’s will. It doesn’t create a specific type of trust; it gives the surviving spouse the option to create a trust (such as a credit trust). Sometimes, lawyers will put this into a will so that the surviving spouse has some flexibility and can determine at the time of death what type of trust is necessary.

Revocable trust: A type of trust where its terms can be modified, amended or terminated by the trustee without getting permission from the named beneficiaries of the trust. The downside to revocable trusts is that the assets remain as part of your estate, so they will not be shielded from taxes or creditors if you are sued.

Irrevocable trust: A type of trust where its terms cannot be modified, amended or terminated without getting permission from the named beneficiaries of the trust. The main reason to make a trust irrevocable trust is taxes. Irrevocable trusts remove the assets from the benefactor’s taxable estate. In addition, irrevocable trusts protect the assets from creditors.