Trusts can range from simple to extremely complex, and are a standard tool in the anti-estate-tax arsenal.
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. Which one is the best option for you?
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.
If you have questions about these or other types of trusts, consult an experienced estate planning attorney. He or she can help you select the type of trust best for your unique circumstances.
Reference: Wills, Trusts & Estates Prof Blog (February 13, 2015) "Choosing A Trust."