top of page
Search

U.S. Estate Planning: Common Trust Types

Estate planning often involves specialized trust structures designed to address different family and financial circumstances. Trusts can serve purposes such as asset protection, charitable giving, or supporting beneficiaries with unique needs. The following overview highlights several commonly discussed trust types. This information is intended for general educational purposes only and should not be considered legal or tax advice. Individuals should consult qualified professionals before making estate planning decisions.


Irrevocable Life Insurance Trust (ILIT) US estate planning trust types

An ILIT is a trust arrangement that can hold life insurance policies. It is often used to help manage liquidity for estate expenses and provide support for beneficiaries.


Key features:

  • Typically irrevocable once established

  • Trust is the policy owner and beneficiary

  • May provide liquidity for estate obligations

  • Often funded through annual contributions to cover premiums


Spousal Lifetime Access Trust (SLAT)

A SLAT is an irrevocable trust created by one spouse for the benefit of the other. It is sometimes used by couples seeking to transfer assets while maintaining indirect access.


Key features:

  • Established by one spouse for the other’s benefit

  • Assets are generally removed from the grantor’s estate

  • May include children or descendants as remainder beneficiaries

Grantor-Retained Annuity Trust (GRAT)

A GRAT allows a grantor to transfer assets while retaining annuity payments for a set period. It is often considered when assets are expected to appreciate.


Key features:

  • Grantor receives fixed annuity payments

  • Any appreciation above a set rate may benefit beneficiaries

  • Effectiveness depends on interest rate environments and asset performance

Charitable Remainder Trust (CRT)

A CRT provides income to designated beneficiaries for a period, with the remainder ultimately passing to charity.  US estate planning trust types


Key features:

  • Income stream for non-charitable beneficiaries

  • Remainder goes to qualified charitable organizations

  • May offer tax benefits depending on circumstances

Special Needs Trust

Special needs trusts are designed to provide financial support for individuals with disabilities while helping preserve eligibility for government benefits.


Key features:

  • Can be funded by the beneficiary (first-party) or others (third-party)

  • Trustee manages distributions to supplement public assistance

  • Must comply with specific regulations to protect benefits


Considerations: 

These trusts require careful administration and oversight to ensure compliance with regulations, and that distributions supplement rather than replace public assistance.

Qualified Domestic Trust (QDOT)

A QDOT is a trust structure that can extend certain estate tax benefits to non‑citizen surviving spouses.


Key features:

  • Allows non‑citizen spouses to access marital deduction benefits

  • Requires a U.S. trustee or domestic corporation

  • Estate taxes may be deferred until the surviving spouse’s death


Dynasty Trust

A dynasty trust is designed to hold assets for multiple generations, often with the goal of long‑term wealth preservation.


Key features:

  • Benefits multiple generations

  • May minimize transfer taxes depending on jurisdiction

  • Provides long‑term asset protection

  • Effectiveness depends on state laws and careful planning


Important Note

Trusts are complex legal instruments subject to federal and state laws. Their benefits and limitations vary based on individual circumstances, asset types, and evolving regulations. This overview is for general educational purposes only. Anyone considering these strategies should seek advice from qualified estate planning attorneys, tax advisors, or financial professionals.

📚 Article Series: US Estate Planning

Copyright © 2026 by Del Sol CPA Services


Comments

bottom of page