Here’s a quick overview of ten common types of trusts that are key tools in the planning toolbox.
Creating an estate plan can seem daunting – that’s where I can help. When we meet to discuss your goals, we’ll address your specific circumstances and your specific wishes. We’ll find the right tools in the toolbox to design a plan that incorporates the best kinds of trusts for your family and financial situation.
1.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.
2.Charitable Lead Trusts. CLTs are split-interest trusts which provide a stream of income to a charity of your choice for years or a lifetime. Whatever’s left goes to you or your loved ones.
3.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.
4.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.
5.Generation-Skipping Trusts. GST Trusts allow you to distribute your assets to your grandchildren, or even to later generations, without paying the generation-skipping tax.
6.Grantor Retained Annuity Trusts. GRATs are irrevocable trusts which are used to make large financial gifts to family members while limiting estate and gift taxes.
7.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.
8.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.
9.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.
10.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 maybe a spendthrift. Trusts also provide asset protection from lawsuits brought against the beneficiary.
This is, just the tip of the iceberg — there are many many more ways to help you select which trusts, if any, are a good fit for you. Call today. I look forward to meeting you.