There are basically two ways to set up a legal trust. Testamentary - This means the trust is part of a will and does not take effect until after the person who drew up the will dies. Parents can change the trust's terms any time the will is changed. So, if the intended beneficiary should die first, the will and trust can change. Grandparents can make testamentary bequests from their will to the trust set up for the child with mental retardation.
Parents can be the trustee and manage the trust according to their own discretion.
They can also assign someone else to be trustee to see how that person would manage the trust. Living trusts are either revocable or irrevocable. This means parents can change a revocable trust or end it before they die. With an irrevocable trust, parents set up the trust and give up most power to change or end it. Both ways of setting up trusts have different tax advantages and disadvantages according to the size of the parents' estate, family situation and many other factors.