Trusts & Taxes
Overview of Specific Types of Trusts
Many different kinds of trusts are available to accommodate a wide variety of circumstances. Please contact us so that we can discuss your individual situation and help tailor an estate plan that fits your unique needs. Below is a general overview of some common types of trusts that are used in estate planning
Please select a link below for information on specific types of trusts
- Charitable Trust
- Children's Trust
- Credit Shelter Trust
- Irrevocable Life Insurance Trusts
- QTIP Trust
- Spendthrift Trust
A charitable trust is established to provide support to specified charities. This type of trust can be created to provide this support either during the settlor’s life or after the settlor’s death. By forming a charitable trust, the settler or his estate may receive a charitable deduction.
TopThese trusts prevent children from receiving their inheritance outright before the decedent wishes. Failure to create a trust for a minor child may result in a court-appointed guardian of their estate during their minority and an outright distribution at the age of 18. Through the use of a children’s trust, one can specify the ages at which they want their child(ren) to receive distributions of principal. Additional restrictions may also be included in the terms of the trust.
TopAssuming that their trusts are fully funded, credit shelter trusts allow a married couple to utilize their combined Federal Estate Tax exemption, regardless of which spouse dies first. This type of trust generally distributes 100% of the trust's income to the surviving spouse and distributes principal as necessary for the surviving spouse's health, education, maintenance and support.
TopIrrevocable Life Insurance Trusts
These trusts, commonly known as ILITs, are established to allow proceeds from a decedent's life insurance policy to be kept out of the taxable estate for Federal Estate Tax purposes
TopA QTIP Trust is a trust that provides a surviving spouse with trust income during his or her lifetime and passes the remaining trust principal to the decedent’s children at the surviving spouse’s death. This type of trust is often selected by the client in a second marriage who wants to maintain control over the ultimate distribution of the trust assets.
TopA spendthrift trust is created where the settlor allows the trustee to use discretion in making distributions to a beneficiary who handles money poorly (i.e. a spendthrift).
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