Types of Trusts

Marriage trusts:

One of the most popular uses of trusts is to delay estate taxes until after both spouses have passed away; or to skip the spouse for purposes of transferring property but still giving them the right to income from a trust.

Marital Deduction Trust

A marital deduction trust allows one spouse to put property in a trust with the surviving spouse as a beneficiary. When the first spouse dies, the surviving spouse has the right to use the property in the trust and there is no estate tax, no matter how valuable the property is. Later, any trust property left over transfers to the beneficiaries chosen by the surviving spouse.

Q-Tip Trust

A Q-Tip (Qualified Terminable Interest Property) trust is similar in that it also allows one spouse to put property in a trust with the surviving spouse as the beneficiary. When the first spouse dies, the surviving spouse has the right to use the property in the trust and there is no estate tax, no matter how valuable the property is. The difference is that later, after the surviving spouse passes away, any trust property left over transfers to beneficiaries as originally designated by the first spouse. This type of trust is very common for second marriages and blended families.

Bypass Trust

A bypass trust is used to shelter property from estate tax liability by placing it in trust for someone else besides a spouse. The trust property bypasses the surviving spouse and is held in trust for someone else who is the ultimate beneficiary, such as a child or children. The surviving spouse can benefit from the trust assets during their lifetime but never actually takes possession of them, so the trust property is not included in the surviving spouse's estate for estate tax purposes. The trust agreement specifies the trust rules such as how much interest may be paid to the surviving spouse and how often. To fund a bypass trust, considerations include the current federal estate tax exclusion amount, the value of the estate, and the value of the surviving spouse's estate.

Charitable Trusts:

Charitable Lead Trust

A charitable lead trust is when property is placed in an irrevocable trust and a series of payments are made to a charity, and then at some point in the future, the remaining trust property reverts back to the grantor or is transferred to someone else specified by the grantor (such as their spouse or child).

Charitable Remainder Trust

With a charitable remainder trust, a beneficiary receives a specified amount of money regularly for a specified period of time, and then when the time period has elapsed, whatever is left over goes to the charity. The specified period of time can be, for example, the lifetime of the grantor, or the grantor's spouse, or their child.

Protective Trusts:

Spendthrift Trust

A spendthrift trust protects a beneficiary from themselves. The beneficiary can't touch the property in the trust, only the specified payments made to them. Creditors can't seize the property in the trust, only the payments. Spendthrift provisions can also be incorporated into other kinds of trusts, to give the trustee full discretion over the amounts paid to the beneficiary.

Supplemental Needs Trust

Special Needs Trust

Educational Trusts

Minors Trusts

Grantor Retained Trusts

Irrevocable Life Insurance Trusts