10 Types of Trusts: A Quick Look
Considering the myriad of trusts available, creating an estate plan that works can seem daunting. However, that’s what we, as estate planning attorneys, do every day. We know the laws and will design a plan which addresses your specific situation.
Here’s a look at the basics of ten common trusts to provide a general understanding. There will not be a quiz at the end. All you need to do when we meet is share your goals and insight into your family and financial situation, we’ll design a plan that incorporates the best documents for your situation.
- Bypass Trusts. Commonly referred to as Credit Shelter Trust, Family Trust, or B Trust, Bypass Trusts do just that: bypass the surviving spouse’s estate to take advantage of tax exclusions and provide asset protection.
- Domestic Asset Protection Trusts. DAPT’s are self-settled trusts which can provide a level of asset protection from future creditors and lawsuits, and can be designed as a Hybrid DAPT which provides immediate benefits to a spouse and family members.
- Charitable Remainder Trusts. CRTs are split interest trusts which provide a stream of income to you for a period of years or a lifetime and the remainder goes to the charity of your choice.
- Special Needs Trusts. SNTs allow you to benefit someone with special needs without disqualifying them for governmental benefits. Federal laws allow special needs beneficiaries to obtain benefits from a carefully crafted trust without defeating eligibility for government benefits.
- Medicaid Asset Protection Trusts. MAPT’s are irrevocable trusts and allow you to protect your assets, and loved ones from becoming impoverished from the costs of long term care.
- Veterans Asset Protection Trusts. VAPTS’s are irrevocable trusts which are used to help our disabled Veterans and surviving spouses qualify for pension benefits to assist them pay for the care they need to have a better quality of life.
- Irrevocable Life Insurance Trusts. ILITs are designed to exclude life insurance proceeds from the deceased’s estate for tax purposes. However, proceeds are still available to provide liquidity to pay taxes, equalize inheritances, fund buy-sell agreements, or provide an inheritance.
- Marital Trusts. Marital Trusts are designed to provide asset protection and financial benefits to a surviving spouse. Trust assets are included in his or her estate for tax purposes.
- Qualified Terminable Interest Property Trusts. QTIPs initially provide income to a surviving spouse and, upon his or her death, the remaining assets are distributed to other named beneficiaries. These are commonly used in second marriage situations and to maximize estate and generation-skipping tax exemptions and tax planning flexibility.
- Testamentary Trusts. Testamentary Trusts are created in a will. These trusts are created upon an individual’s death and are commonly used to provide for a beneficiary. They are commonly used when a beneficiary is too young, has medical or drug issues, or may be a spendthrift. Trusts also provide asset protection from lawsuits brought against the beneficiary.
There are many types of trusts available. We’ll help you select which trusts, if any, are a good fit for you. Feel free to call today.