Types of Trusts: A Comprehensive Guide

When it comes to estate planning, trusts are a powerful tool to help you achieve your goals. A trust is a legal arrangement where you transfer ownership of your assets to a trustee, who manages them for the benefit of another person or entity. There are many types of trusts, each with its own unique characteristics and purposes. In this guide, we'll explore the different types of trusts and how they can be used to achieve your estate planning goals.

There are two main types of trusts: revocable and irrevocable. Revocable trusts, also known as living trusts, can be changed or revoked by the grantor (the person who creates the trust) at any time. Irrevocable trusts, on the other hand, cannot be changed or revoked once they are created.

Within these two main categories, there are several subtypes of trusts, including:

• Bypass trusts: These trusts are designed to help you avoid probate and minimize estate taxes.
• Discretionary trusts: These trusts give the trustee broad discretion to distribute trust assets to beneficiaries.
• Grantor retained annuity trusts (GRATs): These trusts allow you to transfer assets to your beneficiaries while minimizing gift taxes.
• Intentionally defective grantor trusts (IDGTs): These trusts allow you to transfer assets to your beneficiaries while minimizing gift taxes and avoiding estate taxes.
• Qualified personal residence trusts (QPRTs): These trusts allow you to transfer your primary residence to your beneficiaries while minimizing gift taxes.
• Special needs trusts: These trusts are designed to provide for the care and support of a person with a disability.
• Tax-exempt trusts: These trusts are designed to provide for the care and support of a person with a disability.

Each type of trust has its own unique characteristics and purposes. It's important to work with an experienced estate planning attorney to determine which type of trust is right for you and your family.

In addition to the types of trusts mentioned above, there are also hybrid trusts, which combine elements of different types of trusts. For example, a grantor retained annuity trust (GRAT) can be combined with a qualified personal residence trust (QPRT) to create a hybrid trust that provides for the transfer of assets to your beneficiaries while minimizing gift taxes and avoiding estate taxes.

When it comes to estate planning, it's important to work with an experienced attorney who can help you create a comprehensive plan that meets your unique needs and goals. An attorney can help you determine which type of trust is right for you and your family, and can also help you create a plan that provides for the care and support of your loved ones.

At Rocket Lawyer, we offer a range of estate planning tools and resources to help you create a comprehensive plan that meets your unique needs and goals. Our estate planning attorneys are experienced and knowledgeable, and can help you create a plan that provides for the care and support of your loved ones.

Whether you're looking to create a simple will or a complex estate plan, we're here to help. Contact us today to learn more about our estate planning services and to schedule a consultation with one of our experienced attorneys.