To many individuals, trust creation is a confusing proposition. This is not surprising considering just how many types of trusts have sprung up in recent years. These many different types of trusts have many different names and serve many different purposes. While it would be impractical for the everyday American have an understanding of every obscure type of trust offered, a recent article discusses several types of trusts that everyone should be familiar with.
- 1. Revocable Living Trust: The revocable living trust (“RLT”) is often touted as an alternative to drafting a will. Importantly, the creator of a RLT can amend or revoke it at any point during his or her lifetime.
- 2. QTIP Trust: The QTIP trust is a great way for high net worth individuals to utilize the marital deduction while retaining control over who will receive his or her assets at the death of his or her surviving spouse.
- 3. Life Insurance Trust: Life insurance is a staple of most estate plans. The life insurance trust, which is an irrevocable trust funded with the proceeds of a life insurance policy, provides multiple benefits including creditor protection, reduced estate taxes, and confidentiality.
- 4. Charitable Remainder Trust: Just as the title suggests, the charitable remainder trust allows the creator of the trust to provide funds to the charity of his or her choice. Importantly, the trust creator retains the right to receive payments from the trust during his or her life.