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What are the different types of Trusts?

A: There are two broad categories of Trusts: Revocable and Irrevocable.  As the names imply, the Grantor (person establishing the Trust) may amend or revoke the Revocable Trust as long as the Grantor is alive and competent, but the Grantor may not change the Irrevocable Trust.  

            The Revocable Trust has also been called the Credit Shelter Trust, Living Trust, Inter Vivos Trust, A/B Trust, Marital/Family Trust, Personal Trust, Grantor Trust, and many other names.  Essentially, the Grantor is creating a legal entity that will hold assets (now or in the future) subject to the Grantor’s immediate control.

            With the Irrevocable Trust the Grantor is transferring assets beyond the Grantor’s control for some tax, family, business or charitable purpose.   There are many distinct types of Irrevocable Trusts, often referred to by the anagrams listed below:

     1.    ILIT: Irrevocable Life Insurance Trust;
     2.    CRT: Charitable Remainder Trust;
     3.    CLT: Charitable Lead Trust;
     4.    QPRT: Qualified Personal Residence Trust;
     5.    QDOT: Qualified Domestic Trust; and
     6.    GRAT: Grantor Retained Annuity Trust.

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