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GLOSSARY OF TRUSTS

Will trust and estate law in Philadelphia Pennsylvania

RS LAW | GLOSSARY OF TRUSTS

Inter-Vivos “Living” Trust

This is the foundation of your estate plan and can be used by a married person, unmarried person, or a joint trust for a couple. You are generally your own trustee, and name a successor trustee to take over management of your affairs in the event you become incapacitated or in the event of your death. At your death the trust assets can either be distributed to your heirs or continue to be held in trust for their benefit.


Irrevocable Life Insurance Trust

An Irrevocable Life Insurance Trust (ILIT)is used to avoid federal estate taxes on life insurance proceeds.  


Domestic Asset Protection Trust (DAPT)

This is a “self-settled” trust for your benefit that may be used for asset protection, estate tax planning, or other reasons. This trust offers state-specific provisions intended to meet the statutory requirements of an asset protection trust.


Intentionally Defective Grantor Trust (IDGT)

An “Intentionally Defective Grantor Trust” (or IDGT), is used to carry out installment sales of family businesses.


Qualified Personal Residence Trust (Q-PRT)

This is a trust under which you transfer your residence or vacation home to certain family members at a reduced gift tax cost by retaining the right to use that residence for a specified number of years, after which it passes to beneficiaries identified in the trust agreement.


Incomplete Gift Trust (ING)

This form of trust is primarily used to avoid state and local income taxes. A Distribution Committee is used to make decisions about distributions to the chosen beneficiaries, who should not be either you or your spouse. You will have a broad “special power of appointment” which allows you to direct the Trust property to pass to your spouse under your  Will or revocable trust.


Community Property Trust

Alaska Community Property Trusts may be used by married couples regardless of the state where they reside. Property contributed to the trust will be converted into community property under Alaska law. At the death of the first spouse to die, both spouse’s interests in the community property receive a full basis adjustment, resulting in income tax savings for the surviving spouse.


Charitable Remainder Trust (CRT)

This is a trust described in which a specified annuity payment or percentage of trust assets are distributed to one or more individuals for a term of years or for the life or lives of certain individuals, and the remainder is distributed to one or more charities. 

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