The 5 Most Common Types of Trusts

 Posted on October 10, 2026 in Estate Planning

Texas families can use different types of trusts for different estate planning goals. Some trusts can help avoid probate, manage property for beneficiaries, protect assets, or preserve eligibility for certain benefits. If you are considering a trust in 2026, a Flower Mound, TX estate planning lawyer can explain which options may fit your family and financial goals.

What Are the Most Common Types of Trusts in Texas?

Texas families tend to use five trusts, and each one solves a different problem.

1. Revocable Living Trust

A revocable living trust is the one most people mean when they say trust. You create it during your lifetime, transfer your assets into it, and serve as your own trustee. Revocable means you can modify it, add or remove assets, change beneficiaries, or cancel it entirely at any point while you are competent.

The main benefit is avoiding probate. Property held in the trust passes to your beneficiaries under its terms without going through court. This saves time and keeps the details private. If you become unable to manage your finances, your named successor trustee can take over managing the assets in the trust without a guardianship for those assets.

What it does not do is reduce taxes or shield assets from creditors. Because you kept control, the law still treats the property as yours.

2. Irrevocable Trust

An irrevocable trust is one you cannot freely change or revoke after creating it. When you transfer assets into an irrevocable trust, you may give up significant control over them. Depending on how the trust is structured, the assets may be kept outside your taxable estate or receive some protection from creditors. You cannot simply take the assets back, and changing beneficiaries later can be difficult.

Texas law does provide some flexibility. Under the Texas Trust Code, Texas Property Code § 112.054, a court may modify or terminate a trust in specific circumstances. An example would be when changed conditions make the original terms impractical or defeat the trust's purpose.

3. Testamentary Trust

A testamentary trust is created by your will and comes into existence only when you die. Parents of minor children use these most often. Rather than leaving money outright to a child who would receive everything at 18, the will directs that the inheritance go into a trust with terms you selected. Because the trust comes from a will, the estate still goes through probate.

The appeal is cost and simplicity. There is no separate trust to fund or manage during your lifetime. Nothing changes about how you hold your property now.

4. Special Needs Trust

A special needs trust holds assets for a person with disabilities without disqualifying them from government benefits. Programs like Supplemental Security Income and Medicaid have strict asset limits. A direct inheritance of even a modest amount can end eligibility, forcing the family to spend the money down before benefits resume.

A properly drafted special needs trust avoids that. The trustee uses funds for things benefits do not cover. This includes therapies, equipment, education, travel, and personal items. The beneficiary never owns or controls the money.

There are two main types of special needs trusts. A third-party trust uses someone else’s money, such as a parent’s or grandparent’s, and can leave remaining funds to other beneficiaries. A first-party trust uses the beneficiary’s own money and must repay Medicaid from any funds left at death.

5. Spendthrift Trust

A spendthrift trust protects a beneficiary's inheritance from creditors and from the beneficiary's own decisions. A spendthrift provision prevents the beneficiary from transferring, assigning, or borrowing against their interest before receiving it. The trustee controls timing and amounts rather than the beneficiary.

Families use this when a beneficiary struggles with money management, faces addiction, works in a profession with lawsuit exposure, or is going through a divorce. The protection ends once money is actually distributed, so what the beneficiary receives becomes reachable.

Contact Our Denton County, TX Wills and Trusts Attorney Today

Attorney Stephen Colbert brings experience from the bench as well as from practice, having served as an administrative law judge and as a tribal judge for the Chickasaw Indian Nation. He can help you draft trust documents that clearly explain your wishes and how your assets should be managed.

Contact Colbert Law Group PLLC at 972-724-3338 to talk to our Flower Mound, TX estate planning lawyer today.