Generally

A trust is a legal agreement created by a trustor, managed by a trustee, and benefiting one or more beneficiaries. While trusts can exist by oral agreement alone, most trusts are embodied in a written trust document.

Function

Trusts are legal methods for holding and owning property. Trusts can own real estate, financial accounts and personal property.

Purpose

Trusts in general are used to avoid probate and to protect property from potential or actual creditors. Irrevocable trusts provide the added benefit of potentially reducing federal and state income taxes. Because the trust owns the property, the trust is taxed instead of the trustor, usually at a lower income tax rate.

Irrevocable

Some trusts provide that they are irrevocable. This means that the trustor cannot revoke, or terminate, the trust without the consent of the trustee and the beneficiaries. The general rule is that trusts are revocable, unless the trust agreement expressly provides that it is irrevocable.

Living

A living trust means that it is created during the trustor's lifetime. Contrast a living trust with a testamentary trust that only springs into existence based on the provisions of a deceased person's will.

Source:

Nolo's Make Your Own Living Trust; Attorney Dennis Clifford; 2009