While all trusts share some similarities, there are many different types of trusts that you can use as part of your estate plan. For that reason, it is helpful to know what some of your alternatives are if you are considering getting a trust.
Trusts can be a bit confusing. Most know the basics. Trusts are a legal entity managed by a trustee for the benefit of others. Beyond that, however, trusts can get murky as there are many different types of trusts that are sometimes confusing to non-experts.
To help people overcome trust confusion, the Wills, Trusts & Estates Prof Blog recently published a short list of different types of trusts in an article titled "Choosing A Trust."
The list includes:
- Credit Shelter Trust - With this trust a spouse can leave everything to a surviving spouse in a will, but direct that everything be placed into the trust while maintaining the estate tax benefits.
- Clayton QTIP Trust - Similar to the more well-known QTIP trust, but if a QTIP election is not made, it acts like a credit shelter trust.
- Irrevocable Life Insurance Trust - These trusts are created to be the beneficiary of life insurance policies, which keeps the payout from those policies outside of the estate for tax purposes.
- Charitable Remainder Trusts - Directs that assets be paid to the beneficiaries for life with anything left over distributed to charity.
Reference: Wills, Trusts & Estates Prof Blog (February 13, 2015) "Choosing A Trust."