Trusts go by many different names, depending on the characteristics or the purpose of the trust. Because trusts often have multiple characteristics or purposes, a single trust might accurately be described in several ways. For example, a living trust is often an express trust, which is also a revocable trust, and might include an incentive trust, and so forth.

The wide range of available trusts allows individuals or families in a variety of financial circumstances, to protect assets and ensure the security of family members.  One size does not fit all.  These types of trusts offer estate and financial planning options for diverse needs and circumstances.

Following list is by no means a complete list of Trusts, but can give you an idea about the breadth and scope of Trust Planning. It is being provided for educational purposes only and is not meant to give you Legal, Tax, Estate Planning or Financial Planning advice. Please consult with your own Tax or Estate Attorneys or Financial advisor.

 for additional information.

Partial List of trust types (alphabetical):

• Blind Trust:  Blind trusts allow the trustees, or anyone who is holding a power of attorney, to handle the assets of the trust without the knowledge of the beneficiaries. These trusts can be useful in situations where the beneficiary should be kept unaware of the contents of the trust to avoid conflicts of interest.

• Buildup Equity Retirement Trust:  In this trust, a spouse (the donor) makes gifts to the other spouse using an annual gifting exemption instead of an unlimited marital deduction. In this way the assets are exempt from both gift and estate taxes.

• Charitable Lead Annuity Trust (CLAT): This irrevocable trust provides an income interest to a charitable organization, while passing assets to other beneficiaries. Part of this interest goes to another beneficiary, such as the donor, their family members or other individuals.

• Charitable Lead Unitrust (CLUT):  This trust allows a donor to give a variable amount annually from the trust to charity for a fixed term of the life of an individual. When the term of the trust is over, remaining assets are distributed back to the donor or other designated recipient.

• Charitable Remainder Annuity Trust  (CRAT):  This trust allows a donor to place a large gift of assets such as cash or property into a trust that pays back a fixed amount each year.  Upon the donor’s death, the remaining assets are transferred to the designated charity.

• Charitable Remainder Unitrust (CRUT):  This irrevocable trust was created under the authority of the Internal Revenue Service and distributes a fixed percentage of its assets to a beneficiary, and, at the end of a fixed term, the remainder of the assets are transferred to a designated charitable organization.

• Constructive trust: Unlike an express trust, a constructive trust is not created by an agreement between a trustor and the trustee. A constructive trust is imposed by the law as an “equitable remedy.” This generally occurs due to some wrongdoing, where the wrongdoer has acquired legal title to some property and cannot in good conscience be allowed to benefit from it. A constructive trust is, essentially, a legal fiction. For example, a court of equity recognizing a plaintiff’s request for the equitable remedy of a constructive trust may decide that a constructive trust has been created and simply order the person holding the assets to deliver them to the person who rightfully should have them. The constructive trustee is not necessarily the person who is guilty of the wrongdoing, and in practice it is often a bank or similar organization. The distinction may be finer than the preceding exposition in that there are also said to be two forms of constructive trust, the institutional constructive trust and the remedial constructive trust. The latter is an “equitable remedy” imposed by law being truly remedial; the former arising due to some defect in the transfer of property.

• Credit Shelter Trust:  The Credit Shelter Trust allows a married person to avoid estate taxes by allowing the assets specified in the trust agreement to be transferred to the beneficiaries, usually the investor’s children.  This trust allows each spouse to maximize their personal estate tax exemption.

• Discretionary trust: In a discretionary trust, certainty of object is satisfied if it can be said that there is a criterion which a person must satisfy in order to be a beneficiary (i.e., whether there is a ‘class’ of beneficiaries, which a person can be said to belong to). In discretionary trusts the beneficiaries and assets are not fixed, but determined by criteria established in a trust instrument and administered at the discretion of the trustees, who decide which beneficiaries, and which assets from the trust, will be involved.

• Directed trust: In these types, a directed trustee is directed by a number of other trust participants in implementing the trust’s execution; these participants may include a distribution committee, trust protector, or investment advisor. The directed trustee’s role is administrative which involves following investment instructions, holding legal title to the trust assets, providing fiduciary and tax accounting, coordinating trust participants and offering dispute resolution among the participants.

• Domestic Asset Protection Trust:  The DAPT is created in states that have anti-creditor trust acts (Alaska, Delaware, South Dakota, Nevada and some others), and allows an individual to establish a trust for his or her own assets that offers protection from creditors.

• Dynasty trust (also known as a generation-skipping trust): Types of trusts in which assets are passed down to the grantor’s grandchildren, not the grantor’s children. The children of the grantor never take title to the assets. This allows the grantor to avoid the estate taxes that would apply if the assets were transferred to his or her children first. Generation-skipping trusts can still be used to provide financial benefits to a grantor’s children, however, because any income generated by the trust’s assets can be made accessible to the grantor’s children while still leaving the assets in trust for the grandchildren.

• Express trust: An express trust arises where a settlor deliberately and consciously decides to create a trust, over their assets, either now, or upon his or her later death. In these cases this will be achieved by signing a trust instrument, which will either be a will or a trust deed. Almost all trusts dealt with in the trust industry are of this type. They contrast with resulting and constructive trusts. The intention of the parties to create the trust must be shown clearly by their language or conduct. For an express trust to exist, there must be certainty to the objects of the trust and the trust property. In the USA Statute of Frauds provisions require express trusts to be evidenced in writing if the trust property is above a certain value, or is real estate.

• Fixed trust: In a fixed trust, the entitlement of the beneficiaries is fixed by the settlor. The trustee has little or no discretion. Common examples are: a trust for a minor (“to x if she attains 21”); a life interest (“to pay the income to x for her lifetime”); and a remainder (“to pay the capital to y after the death of x”)

 

• Generation Skipping Trust:  This trust places assets in a trust designed to transfer them to a grantor’s grandchildren, rather than children, in order to avoid estate taxes that occur if the deceased’s children directly inherit the assets.

• Grantor Retained Annuity Trust (GRAT): This trust allows an individual to make large financial gifts to family members while avoiding the gift tax. The trust is set up as an annuity, allowing the donor to make a donation and receive an annual payment from the annuity for a fixed term At the end of the term, remaining assets in the trust go to the beneficiary as a gift.

• Grantor Retained Unitrust (GRUT):  This type of irrevocable trust allows the grantor to put assets into the trust and receive a variable amount of income from an annuity during the term of the trust, which can be fixed or for the life of the grantor.

• Grantor Retained Income Trust (GRIT):  This type of trust allows the grantor to place assets in the trust for a beneficiary, but still retain the right to receive income from these assets for a certain period of time, after which the beneficiary starts to receive income.

• Grantor Trust: The Grantor Trust initiated by the Grantor in order to transfer property to another person or business entity for purposes of avoiding probate, taxes, or other complications stemming from the disposal of assets.

• Hybrid trust: A hybrid trust combines elements of both fixed and discretionary trusts. In a hybrid trust, the trustee must pay a certain amount of the trust property to each beneficiary fixed by the trustor. But the trustee has discretion as to how any remaining trust property, once these fixed amounts have been paid out, is to be paid to the beneficiaries.

• Implied trust: An implied trust, as distinct from an express trust, is created where some of the legal requirements for an express trust are not met, but an intention on behalf of the parties to create a trust can be presumed to exist. A resulting trust may be deemed to be present where a trust instrument is not properly drafted and a portion of the equitable title has not been provided for. In such a case, the law may raise a resulting trust for the benefit of the grantor (the creator of the trust). In other words, the grantor may be deemed to be a beneficiary of the portion of the equitable title that was not properly provided for in the trust document.

 

• Incentive trust: A trust that uses distributions from income or principal as an incentive to encourage or discourage certain behaviors on the part of the beneficiary. The term “incentive trust” is sometimes used to distinguish trusts that provide fixed conditions for access to trust funds from discretionary trusts that leave such decisions up to the trustee.

• Intentionally Defective Grantor Trust:  A trust created to freeze some of an individual’s assets for estate tax purposes, the intentionally defective trust is established as a grantor trust with a flaw intentionally built in to ensure that the individual must continue to pay income taxes, which reduces the value of the grantor’s estate and allows beneficiaries such as children or grandchildren to receive the full value of the assets.

• Inter vivos trust (or living trust or Revocable living trust): A trustor who is living at the time the trust is established creates an inter vivos trust. The inter vivos trust, also called a revocable living trust, is often established to avoid the probate process, and make sure that assets go to the trust grantor (creator) intended recipients without a lengthy court process after the grantor’s death.  Typically, the revocable living trust is the main trust containing many sub-trusts.

• IRA Trust:  To preserve assets from taxation, an individual can establish a trust as the beneficiary of an IRA account, which protects the beneficiaries, such as young children or adult children with special needs.

• Irrevocable trust: In contrast to a revocable trust, an irrevocable trust is one in which the terms of the trust cannot be amended or revised until the terms or purposes of the trust have been completed. Although in rare cases, a court may change the terms of the trust due to unexpected changes in circumstances that make the trust uneconomical or unwieldy to administer, under normal circumstances an irrevocable trust may not be changed by the trustee or the beneficiaries of the trust.

• Irrevocable Life Insurance Trust (ILIT): This trust helps to preserve proceeds from life insurance from taxation, and allows the Trust to invest a deceased person’s life insurance benefit and administer the trust for a surviving spouse and children.

• Irrevocable Living Trust: These trusts are contracts created to transfer or manage assets of an individual that the trust creator claims is not competent to manage property or other assets.  The irrevocable aspect can be limited to a portion of the trust – so other parts of the trust could be changed.  So, depending on the terms of these trusts, these types of trusts cannot be changed or reversed.

• Land Trust:  These trusts appoint a trustee to maintain ownership and management of a piece of real property for the benefit of a beneficiary. These trusts may also be held by nonprofit entities for conservation purposes, or by corporations to accumulate large amounts of land.

• Marital Trust:  A Marital Trust creates a trust to benefit a surviving spouse and the heirs of the couple.  Assets are moved into the trust when the first spouse dies, and the income generated by the assets are transferred to the surviving spouse. When that individual dies, the remaining assets go to the couple’s heirs.

• Medicaid Trust (Income Only Trust): This trust helps seniors avoid tax issues and probate problems when a spouse living in a nursing home dies.  This trust protects assets when an individual has too many resources to be eligible for Medicaid.

• Minor’s Trust:  The Minor’s Trust passes assets to a child and provides for management of those assets until the child reaches a certain age that the trust creator specifies, when he or she assumes full control of the assets.  This trust avoids expensive guardianship proceedings needed to manage the assets the child inherits before he or she turns 18 years old.  This arrangement holds all assets in the trust secure for the minor child, since the grantor receives no income from the trust’s assets.

• Offshore trust: Strictly speaking, an offshore trust is a trust which is resident in any jurisdiction other than that in which the settlor is resident. However, the term is more commonly used to describe a trust in one of the jurisdictions known as offshore financial centers or, colloquially, as tax havens. This trust is established in a non-domestic jurisdiction and allows assets to be conveyed to the offshore trusts for protection from seizure in judgments for creditors. Offshore trusts are usually conceptually similar to onshore trusts in common law countries, but usually with legislative modifications to make them more commercially attractive by abolishing or modifying certain common law restrictions. By extension, “onshore trust” has come to mean any trust resident in a high-tax jurisdiction.

• Personal injury trust: A personal injury trust is any form of trust where funds are held by trustees for the benefit of a person who has suffered an injury and funded exclusively by funds derived from payments made in consequence of that injury.

• Pooled Trust:  Designed to help disabled people qualify for Medicaid, a pooled trust is run by a nonprofit organization and allows individuals to deposit excess assets (over the Medicare eligibility limits) into the trust, which pays the disabled person’s additional bills and allows them to qualify for Medicaid for nursing home benefits.

• Private and public trusts: A private trust has one or more particular individuals as its beneficiary. By contrast, a public trust (also called a charitable trust) has some charitable end as its beneficiary. In order to qualify as a charitable trust, the trust must have as its object certain purposes such as alleviating poverty, providing education, carrying out some religious purpose, etc. The permissible objects are generally set out in legislation, but objects not explicitly set out may also be an object of a charitable trust, by analogy. Charitable trusts are entitled to special treatment under the law of trusts and also the law of taxation.

• Protective trust: A protective trust is a type of trust that was devised for use in estate planning. (In another jurisdiction this might be thought of as one type of asset protection trust.) Often a person, A, wishes to leave property to another person B. A, however, fears that the property might be claimed by creditors before A dies, and that therefore B would receive none of it. A could establish a trust with B as the beneficiary, but then A would not be entitled to use of the property before they died. Protective trusts were developed as a solution to this situation. A would establish a trust with both A and B as beneficiaries, with the trustee instructed to allow A use of the property until they died, and thereafter to allow its use to B. The property is then safe from being claimed by A‘s creditors, at least so long as the debt was entered into after the trust’s establishment. This use of trusts is similar to life estates and remainders, and are frequently used as alternatives to them.

• Qualified Income Trust (QIT):  The Qualified Income Trust protects assets when an individual applying for Medicaid has income in excess of the amount needed for Medicaid eligibility. The QIT is an irrevocable trust that creates eligibility for long term nursing home care through Medicaid.

• QTIP Trust: Short for “qualified terminal interest property.” A trust recognized under the tax laws of the United States which qualifies for the marital gift exclusion from the estate tax. This trust also allows the grantor to retain control of the distribution of the trust’s assets after the death of the surviving spouse.  Useful for second marriage families and for families wanting to protect assets from predatory marriages.

• Qualified Personal Residence Trust:  This  trust transfers the grantor’s residence out of the estate, removing it from the value of the grantor’s estate as a gift. Under the terms of the trust, the grantor can continue to live in the residence for a number of years rent free, before the beneficiaries of the trust are vested in their interests.

• Resulting trust: A resulting trust is a form of implied trust which occurs where (1) a trust fails, wholly or in part, as a result of which the trustor becomes entitled to the assets; or (2) a voluntary payment is made by A to B in circumstances which do not suggest gifting. B becomes the resulting trustee of A’s payment.

• Revocable trust: A trust of this kind may be amended, altered or revoked by its trustor at any time, provided the trustor is not mentally incapacitated. Revocable trusts are becoming increasingly common in the US as a substitute for a will to minimize administrative costs associated with probate and to provide centralized administration of a person’s final affairs after death.

• Revocable Living Trust or Inter Vivos Trust: The inter vivos trust, also called a revocable living trust, is often established to avoid the probate process, and make sure that assets go to the trust grantor (creator) intended recipients without a lengthy court process after the grantor’s death.  Typically, the revocable living trust is the main trust containing many sub-trusts.

• Secret trust: A post mortem trust constituted externally from a will but imposing obligations as a trustee on one, or more, legatees of a will.

• Sharkfin Charitable Lead Annuity Trust:  The “Sharkfin” trust allows for small payments to be made into a charitable lead annuity trust for the first few years of the trust term, but a very large payment must be made into the trust in the last year or two.

• Simple trust: A Simple Trust has two distinct meanings. In a simple trust the trustee has no active duty beyond conveying the property to the beneficiary at some future time determined by the trust. This is also called a bare trust. All other trusts are special trusts where the trustee has active duties beyond this. A simple trust in Federal income tax law is one in which, under the terms of the trust document, all net income must be distributed on an annual basis.

• Special trust: In the US, a special trust, also called complex trust, contrasts with a simple trust (see above). It does not require the income be paid out within the subject tax year. The funds from a complex trust can also be used to donate to a charity or for charitable purposes.

• Special Power of Appointment trust (SPA Trust): A trust implementing a special power of appointment to provide asset protection features.

• Spendthrift trust or Separate Share Trust or Beneficiary’s Trust: It is a trust put into place for the benefit of a person who is unable to control their spending. It gives the trustee the power to decide how the trust funds may be spent for the benefit of the beneficiary. Separate Share Trusts allow parents to establish a trust with separate features to accommodate the unique needs of each child, while a Spendthrift Trust, or a trust with a spendthrift clause, protects the trust’s assets from being claimed by creditors and allows the assets to be managed by an independent trustee.

• Spousal Testamentary Special Needs Trust:  This trust protects assets for the surviving spouse from being counted by Medicaid. It is embedded into a will as a testamentary trust and becomes active upon the death of the grantor, so that the surviving spouse is not considered to be the actual owner of the assets named in the Trust.

• Standby Trust (or Pourover Trust): The trust is empty at creation during life and the will transfers the property into the trust at death. This is a statutory trust.

• Supplemental Needs Trust:  Established by a family member, guardian or the court, this trust helps to preserve financial security for individuals with special needs by allowing an individual to benefit from supplemental resources while keeping eligibility for public aid like SSI and Medicaid.

• Testamentary trust (or Will Trust): A trust created in an individual’s will is called a testamentary trust. Because a will can become effective only upon death, a testamentary trust is generally created at or following the date of the trustor’s death. This type of irrevocable trust is used to leave assets to a beneficiary but only at a specified time, and take effect upon the grantor’s death.  This trust does not avoid probate – it actually needs probate to take effect.

• Third Party Special Needs Trust (Supplemental Needs Trust):  The Third Party Special Needs Trust benefits individuals with special needs and is intended to hold assets given or bequeathed to such an individual from a third party, such as parents or other family members, and provides for the person’s care and comfort after using up government benefits.  Without this trust, special needs individuals that receive financially based government benefits may lose those benefits.

• Totten Trust:  This trust allows an individual to put money into a bank account or other form of security to be held until death, when the contents of the account will pass to a designated beneficiary without having to deal with probate.  This is also known as a pay on death designation.

• VA Eligibility Trust: The VA Eligibility Trust protects assets outside the assets limits for long term assisted living, in-home, or nursing care and ensures eligibility for that care if needed.