Trusts can be a bit confusing. Everyone knows the basics. Trusts are a legal entity managed by a trustee for the benefit of others. Beyond that, however, trusts can get murky as there are many different types of trusts that are sometimes confusing to non-experts.
To help people overcome trust confusion, the Wills, Trusts & Estates Prof Blog recently published a short list of different types of trusts in an article titled “Choosing A Trust.”
The list includes:
- Credit Shelter Trust – With this trust a spouse can leave everything to a surviving spouse in a will, but direct that everything be placed into the trust while maintaining the estate tax benefits.
- Clayton QTIP Trust – Similar to the more well-known QTIP trust, but if a QTIP election is not made, it acts like a credit shelter trust.
- Irrevocable Life Insurance Trust – These trusts are created to be the beneficiary of life insurance policies, which keeps the payout from those policies outside of the estate for tax purposes.
- Charitable Remainder Trusts – Directs that assets be paid to the beneficiaries for life with anything left over distributed to charity.