Types of Trusts in New York

more+
less-

Trusts aren’t just for the wealthy anymore. Many modern estate plans incorporate some type of trust for a wide variety of reasons.  Some types of trusts are used to postpone or eliminate estate taxes.  Others are used to deal with specific situations, such as an incapacitated beneficiary or to protect a beneficiary against creditors.

Here is a brief overview of some of the more common types of trusts that can be utilized in New York estate planning:

  • Revocable Living Trust — A trust that allows you to leave property to your loved ones like a will does, but also allows your family to avoid probate, which can save your family time, money, and aggravation. You can change the terms of the trust or revoke it at any time.
  • Testamentary Trust — Any trust created under a will that springs into existence at the maker’s death.
  • Supplemental Needs Trust — A trust created for the benefit of an incapacitated person.  The assets can be used for the benefit of the incapacitated person, while still maintaining the person’s eligibility for governmental benefits.
  • Qualified Personal Residence Trust (QPRT) — A type of irrevocable trust that is designed to hold and own your primary or secondary residence and remove its value from your taxable estate.
  • Life Insurance Trust — A trust that is set up for the purpose of transferring the proceeds of a life insurance policy to beneficiaries free of estate tax.
  • Charitable Trust — A trust that makes gifts to charities and achieves income and estate tax savings for the person who creates the trust. Charitable trusts require that you give up legal control of your property, and you cannot later change your mind.
  • Medicaid Trust — A trust created to protect assets and permit the grantor to qualify for Medicaid benefits.
  • Pet Trust — A trust in which the grantor places assets in the care of the trustee for the benefit of a pet.

In addition, there are many other types of trusts, such as credit shelter trusts and generation skipping trusts, just to name a few.