If the beneficiary is capable, and the only reasons to provide for the beneficiary are to keep the inheritance out of the beneficiary's estate and to protect it against potential creditors and spouses, then you would make the trust as flexible as possible, and give the beneficiary as much control as possible. In these cases, we typically give the trustees discretion to distribute the income and principal to the beneficiary and his/her issue, or to accumulate the income. Upon reaching a specified age, we give the beneficiary the right to become a trustee, the power to remove and replace his/her co-trustee (provided the replacement is not a close relative or subordinate employee). We also give the beneficiary the power to appoint (give or leave) the trust assets to anyone he/she wants (except himself/herself), either during lifetime after a specified age, and by Will. (Eric uses a slight variation of this format, which works equally well in keeping the trust assets out of the child's estate.)
Depending on the particular situation, sometimes there's a reason to give the beneficiary a lesser degree of control, or no control at all. Since it's hard to predict the future, we still want these trusts to be as flexible as possible. We almost always give the trustees complete discretion to distribute the income to the beneficiary and his/her issue, or to accumulate the income. We sometimes give someone the power to remove and replace the trustees, or the beneficiary the power to remove and replace the trustees provided the replacement is a bank or trust company.
There are other variations from case to case. The key is to provide flexibility. The most common errors are requiring that the income be distributed (except in a marital trust where the spouse must be entitled to the income), limiting the ability to distribute principal, not giving the beneficiary a power of appointment (unless there's some reason not to give the beneficiary that power in a particular case), and requiring that the trust end at a specified age.
A trust can invest in the same investments that anyone else can, so the investment fees need not be higher or lower than if the beneficiary owned the assets outright.
While most people select individual trustees, sometimes it makes sense to have a bank or trust company as a trustee. They'll charge about 1% per year, perhaps a little more on smaller trusts and less on larger trusts. If they invest in their own mutual funds, they'll usually credit their management fee at the fund level against their trustee's commissions (fees).
If you're leaving each child a few hundred thousand dollars or more, I would suggest you provide for each child in a separate trust rather than outright, for the reasons set forth in the first paragraph. If, but for these protections, you would have provided for your children outright, then you would probably let each child control his/her trust, as set forth in the first paragraph. In that case, you wouldn't be dictating from the grave. If it turns out that it's not worth the effort to administer the trusts, the trustees can always terminate the trusts and distribute the trust assets to the beneficiaries. However, if you leave the money to your children outright, but it turns out that it would have been better to have provided for them in trust, it's too late. You can take the money out of a trust, but you can't put it back in.
It's like toothpaste. You can take the toothpaste out of the tube, but you can't put it back in the tube. When you buy a tube of toothpaste, you don't immediately take all the toothpaste out of the tube. You leave it in the tube, and take it out as you need it.