What are the different types of trusts?
This guide explores the different types of trusts and how they can be used to achieve your estate planning goals.
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What are trusts?
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.
What are the two main types of trusts?
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.
What are the different subtypes of trusts?
Within these two main categories, there are several subtypes of trusts, including:
What is a bypass trust?
Bypass trusts are designed to help you avoid probate and minimize estate taxes.
What is a discretionary trust?
Discretionary trusts give the trustee broad discretion to distribute trust assets to beneficiaries.
What is a grantor retained annuity trust (GRAT)?
GRATs allow you to transfer assets to your beneficiaries while minimizing gift taxes.
What is an intentionally defective grantor trust (IDGT)?
IDGTs allow you to transfer assets to your beneficiaries while minimizing gift taxes and avoiding estate taxes.
What is a qualified personal residence trust (QPRT)?
QPRTs allow you to transfer your primary residence to your beneficiaries while minimizing gift taxes.
What is a special needs trust?
Special needs trusts are designed to provide for the care and support of a person with a disability.
What is a tax-exempt trust?
Tax-exempt trusts are designed to provide for the care and support of a person with a disability.
Can trusts be combined?
Yes, trusts can be combined to create hybrid 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.
Why is it important to work with an attorney?
It's important to work with an experienced estate planning attorney to determine which type of trust is right for you and your family. An attorney can help you create a comprehensive plan that meets your unique needs and goals.
What services does Rocket Lawyer offer?
Rocket Lawyer offers 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.
