An A-to-Z guide to trusts
Trusts go by many names, and one trust can fit several categories. A living trust, for example, is also an express trust and a revocable trust. No single type fits everyone; this guide helps you start the conversation.
Blind Trust
PurposeAn independent trustee manages the assets without the beneficiary knowing what is held, which helps avoid conflicts of interest.
Charitable Lead Annuity Trust (CLAT)
CharitablePays a fixed annual amount to charity for a set term; the remaining assets then pass to your family, often with reduced gift or estate tax.
Charitable Lead Unitrust (CLUT)
CharitablePays charity a fixed percentage of the trust value, revalued each year, for a set term; the remainder passes to your chosen beneficiaries.
Charitable Remainder Annuity Trust (CRAT)
CharitableYou transfer cash or property and receive a fixed annual payment for life or a term of years; the remainder goes to charity. Can help defer capital gains on appreciated assets.
Charitable Remainder Unitrust (CRUT)
CharitablePays you a fixed percentage of the trust value each year, so income can grow with the trust; the remainder goes to charity.
Constructive Trust
LegalImposed by a court, not created by agreement, so that someone who wrongfully obtained property cannot keep the benefit of it.
Credit Shelter (Bypass) Trust
Estate taxLets a married couple use the first spouse's estate tax exemption, passing assets to children while the surviving spouse may still benefit.
Directed Trust
AdministrationThe trustee follows directions from others, such as an investment adviser or distribution committee, and handles the administrative work.
Discretionary Trust
ControlThe trustee decides which beneficiaries receive distributions and how much, within guidelines set in the trust document.
Domestic Asset Protection Trust (DAPT)
Asset protectionAllowed in certain states such as Nevada, South Dakota, Delaware and Alaska; can protect your own assets from future creditors. Not available in every state, including Arizona.
Dynasty (Generation-Skipping) Trust
Estate taxHolds assets for grandchildren and later generations, avoiding estate tax at each generation, while children may still receive income.
Express Trust
LegalA trust deliberately created in writing by its maker, during life or at death. Most trusts are express trusts.
Fixed Trust
ControlEach beneficiary's share is set in the document, leaving the trustee little or no discretion.
Grantor Retained Annuity Trust (GRAT)
Estate taxYou receive a fixed annuity for a term; growth above an IRS rate passes to your family with little or no gift tax.
Grantor Retained Unitrust (GRUT)
Estate taxLike a GRAT, but your annual payment is a fixed percentage of the trust value, revalued each year.
Grantor Retained Income Trust (GRIT)
Estate taxYou keep the income from trust assets for a set period, after which the assets pass to your beneficiaries.
Grantor Trust
TaxA trust whose income is taxed to its maker. Many estate-planning trusts are intentionally designed this way.
Hybrid Trust
ControlCombines fixed payments to beneficiaries with trustee discretion over the rest.
Implied (Resulting) Trust
LegalRecognized by law when the parties clearly intended a trust, or when a trust fails and property returns to its maker.
Incentive Trust
ControlTies distributions to goals or behaviors, such as finishing college or staying employed.
Intentionally Defective Grantor Trust (IDGT)
Estate taxRemoves assets from your estate while you keep paying the trust's income tax, which lets more pass to your heirs.
IRA Trust
RetirementNamed as the beneficiary of an IRA to control and protect inherited retirement money for children, grandchildren or a beneficiary with special needs.
Irrevocable Trust
Asset protectionGenerally cannot be changed once created. Assets given to it may be protected from creditors and removed from your estate.
Irrevocable Life Insurance Trust (ILIT)
Estate taxOwns life insurance so the death benefit stays out of your taxable estate and is managed for your spouse and children.
Land Trust
Real estateA trustee holds title to real estate for a beneficiary, often for privacy or conservation.
Living (Revocable) Trust
ProbateCreated during your lifetime and changeable at any time. Avoids probate and keeps your affairs private, but does not protect assets from your own creditors.
Marital Trust
Estate taxProvides for a surviving spouse, with the remainder passing to heirs after the spouse dies.
Medicaid (Income-Only) Trust
Long-term careAn irrevocable trust that may help protect assets while qualifying for Medicaid nursing-home benefits, subject to a look-back period.
Minor's Trust
FamilyManages assets for a child until a specified age, avoiding a court-supervised guardianship.
Offshore Trust
Asset protectionA trust located outside the U.S., sometimes used for asset protection. It does not avoid U.S. income tax and carries strict reporting rules.
Personal Injury Trust
PurposeHolds compensation received for an injury so it is managed for the injured person.
Pooled Trust
Special needsRun by a nonprofit; lets a person with a disability set aside excess assets and still qualify for Medicaid.
Private and Public (Charitable) Trusts
CharitableA private trust benefits named people; a public or charitable trust serves a charitable purpose and receives special tax treatment.
Protective Trust
Asset protectionLets a beneficiary use property for life while protecting it from that beneficiary's future creditors.
Qualified Income (Miller) Trust
Long-term careHelps a Medicaid applicant whose income is above the eligibility limit qualify for long-term care.
QTIP Trust
Estate taxQualifies for the marital deduction while letting you decide who receives the assets after your spouse dies. Common in second marriages.
Qualified Personal Residence Trust (QPRT)
Estate taxMoves your home out of your estate at a reduced gift value while you keep living there for a set number of years.
Simple and Complex Trusts
TaxFor income tax, a simple trust must distribute all income each year; a complex trust may accumulate income or give to charity.
Special Power of Appointment Trust
Asset protectionUses a power of appointment to add flexibility and asset-protection features.
Spendthrift Trust
Asset protectionProtects a beneficiary's inheritance from their creditors, lawsuits and, in many cases, divorce. An independent trustee controls distributions.
Spousal Testamentary Special Needs Trust
Long-term careCreated in a will to provide for a surviving spouse without counting the assets against Medicaid eligibility.
Standby (Pour-Over) Trust
ProbateStays empty during your life and receives assets from your will at death.
Supplemental (Special) Needs Trust
Special needsProvides extra resources for a person with special needs without disqualifying them from SSI and Medicaid.
Testamentary Trust
FamilyCreated in your will and takes effect at death. It does not avoid probate.
Totten Trust (Payable-on-Death Account)
ProbateA bank account that passes directly to a named beneficiary at death without probate.
VA Eligibility Trust
Long-term careMay help a veteran protect assets above VA limits and qualify for care benefits, subject to look-back rules.
This partial list is for education only and is not legal, tax, estate or financial advice. Trust rules vary by state. Please consult your own estate attorney, tax advisor and financial advisor.
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