Types of Trusts

Charitable Remainder Trust

A Charitable Remainder Trust (or split interest trust) is an irrevocable contractual agreement in which the owner of the property transfers assets to a trustee who manages them for the benefit of the owner who will receive the income or trust payout.  The charity or charities of the owner's choice will eventually receive the remainder of the trust assets.  These trusts are carefully proscribed by the IRS.  They are irrevocable and provide three significant tax benefits:  a current tax deduction, a shelter of the capital gain, and avoidance of federal and state estate tax.


Court Supervised Trust

A trust that is set up and monitored by the courts in order to protect the benficiaries.   Often these trusts are funded with successful lawsuits, such as medical malpractice or personal injury litigation.  The court often appoints us as a trustee when the beneficiary is unable manage his or her assets independently.


Irrevocable Trust

A trust that is created by a grantor and cannot be changed.  Usually, these trusts are established in a will.  A revocable trust may also become irrevocable after the death of a spouse.  The primary benefit to the grantor is control of property and protection for beneficiaries.  Oftentimes, there are also significant tax benefits as well.

Irrevocable Life Insurance Trust (ILIT)

An Irrevocable Life Insurance Trust (ILIT) is a trust designed to keep the proceeds of a life insurance policy outside of the estate and thus free of estate and income tax.  The grantor (owner) transfers money into the ILIT, and the trustee purchases an insurance policy, or the owner transfers an insurance policy to the trust.  When the insured dies, the life insurance proceeds are paid into the trust for the beneficiaries, who are usually the children of the grantor.  The proceeds may also be used to pay federal and state inheritance taxes. 
 

Revocable Living Trust

A trust that describes how the grantor's property should be managed while he or she is alive and how it will be distributed upon death.  It is created and can be changed during the lifetime of the beneficiary.  The three primary benefits of a revocable living trust are:  1) flexibility, 2) protection in the event of incapacity, and 3) avoiding probate, which ensures confidentiality and may be less costly.


Supplemental Care (Special Needs) Trust

A trust that is created to protect the assets of a physically or mentally disabled person while still allowing them to receive benefits from government sources.  By putting the assets in trust, the beneficiary can receive funds without losing Medicare.  The payout is at the discretion of the trustee who supplements the support the beneficiary receives from state and federal sources.  The trust is usually established by the court, and the trustee usually accounts to the court on an annual basis.

Testamentary Trust

A trust created within a will that becomes effective upon the death of the grantor.