A trust is a fiduciary relationship in which one party – the trustor – gives another party – the trustee – the right to hold property or assets on behalf of a beneficiary.In a fiduciary relationship, one person holds a legal or ethical obligation to prudently care for another person’s assets. There are essentially two types of trusts. A living trust is in effect during the trustor’s lifetime. A testamentary trust is created through the will of someone who has passed away. A trust can be used to determine how a person’s money should be managed and distributed while that person is alive, or after their death. A trust helps avoid taxes and probate. It can protect assets from creditors, and it can dictate the terms of an inheritance for beneficiaries. A trust is one way to provide for a beneficiary who is underage or has a mental disability that may impair his abilities to manage finances. Once the beneficiary is deemed capable of managing his assets, he or she will receive possession of the trust. Funds not distributed from a trust are taxed. The disadvantages of trusts are that they require time and money to create, and they cannot be easily revoked.