Trust Types: More Than 100 Kinds of Trusts

Trust Types in Minnesota are Endless

Trust types in Minnesota are nearly endless. The first question to ask when picking a type of trust is to clarify the intended purpose. The trust purpose is dependent on needs, the property being transferred, and the beneficiary. Before going to far into the different types of trust documents, it makes sense defining what having a trust means.

What Is a Trust?

A trust is a document or legal instrument establishing the terms and conditions of our property, which is a legal arrangement where a trustee holds and manages assets on behalf of a beneficiary or beneficiaries. There are several types of trust documents, each with their own specific requirements and purposes.

A trust is a promise made by another person to hold and keep safe, certain property on behalf of another person called a beneficiary.  The person making the promise is called a Trustee.  The Trustee is given access to the property by a person called a Grantor.  In many cases, the Grantor and Trustee are the same person until the Trustee is no longer able to manage their promise.  Ideally, the promise is expressed and described in written format. 

What makes a trust complicated is the fact that there are many types of trusts.  In fact, there are more than 100 different types of trusts.  The trust type is often specific to the Grantor, intentions for the Beneficiary, and a host of other planning goals.   For example, a trust can be used to avoid probate and navigate estate taxes. 

Also, a trust can be used to reduce stress when considering long term care, like a nursing home or skilled nursing facility.  Other times, a trust is used to manage their business affairs, real estate, a family cabin, and protect their assets from creditors or a former spouse.  Additional trust types might involve special needs, titled property, military veteran matters, and or agriculture. 

Before you start focusing on selecting the right type of trust(s) that fit you and your goals, consider reviewing other frequently asked questions herein or attending an upcoming seminar to learn more. 

Revocable Trust Types

One common type of trust document is a revocable living trust. A revocable trust can be used by a single person, a married couple, and unmarried partners. This trust type allows the grantor(s) to maintain control over their assets while they are alive, and transfer them to a designated beneficiary upon death.

There are many disposition options available for this trust type. Even better, it can be modified or revoked any time during the grantor’s lifetime. A Grantor has options regarding pre-residuary gifts for tangible personal property, real property, intangible personal property, pecuniary gifts, and of course, pets.

In addition, this type of trust supports see-through options, single options, and separate trust options for a spouse, descendants, grandchildren, nieces, and nephews.

Tax Planning Options for a Revocable Trust

Tax planning for any kind of trust is an exclusive conversation. Indeed, there are opportunities for tax planning with every trust. Because Minnesota has an estate tax, tax planning is especially important.

Nonetheless, tax planning for either a revocable or irrevocable trust types includes reviewing disclaimer options, credit shelter or marital deductions, seeking excess exemptions like the formation of a QTIP, Generation Skipping Transfers (GST), or optional direction for a deceased spouse’s unused exemption amounts (“DSUEA”). In all, tax planning for a revocable trust is a critical step.

Irrevocable Trust Types

Another trust type is an irrevocable trust. For families domiciled in Minnesota, this type of trust is used most often for life insurance. That said, this type of trust is also used with special needs, elderly care matters (shielding assets from nursing homes), veteran benefits, protecting assets from creditors, and installment sales and purchase agreements.

Single Beneficiary Trust

Another irrevocable trust type is a single beneficiary trust. This is a one named beneficiary for a period of years or for life. Several options are available for the term of the trust and the disposition of the remainder including several optional powers of appointment. Supplemental Needs Trust and “see-through” (accumulation/conduit) trust options are also available.

Children’s Trust

A children’s trust is not what you think. From an irrevocable persecutive, a children’s trust is when a grantor doesn’t retains a right to income or principal. This kind of trust can be either a grantor trust or a non-grantor trust. Also, this type of trust is often used for VA or Medicaid benefits, with the intent of making assets non-countable.

Irrevocable Life Insurance Trust Types or ILIT

Another opportunity in the trust selection process is weighing the pros and cons of an irrevocable life insurance trust (ILIT). This kind of trust holds assets other than (or in addition to) life insurance, including an “intentionally defective grantor trust” (or IDGT). Features of this kind include life insurance provisions intended to save on taxes, Crummey Powers, Installment Options, and contingent martial triggers.

Testamentary Trusts in Minnesota

A less common type of trust is created and administered using a will. In previous decades, testamentary options were very popular. Today, families see the conflict of forcing loved ones into a probate court process to form and facilitate their assets.

For those deciding between a testamentary trust, this type of document is established through a will, and only takes effect after a person dies. It can be revocable or irrevocable, and is often used to provide for minor children or other beneficiaries who may not be able to manage their own assets. Again though, there are stronger options that allow for immediate impact versus waiting and seeking court approval.

All this aside, each type of trust document requires careful consideration and expert legal advice to ensure that it meets the grantor’s needs and objectives.

More Trust Types

Here is list of various trust types to consider:

  • Accumulation Trust
  • Active Trust
  • Alimony Trust
  • Animal Trust
  • Annuity Trust
  • Bank Account Trust
  • Bitcoin Trust
  • Blended Trust
  • Blind Trust
  • Bond Trust
  • Business Trust
  • Bypass Trust
  • Charitable Remainder Annuity Trust
  • Charitable Remainder Trust
  • Charitable Trust
  • Claflin Trust
  • Clifford Trust
  • Common Law Trust
  • Community Trust
  • Complete Voluntary Trust
  • Complex Trust
  • Constructive Trust
  • Contingent Trust
  • Credit Shelter Trust
  • Custodial Trust
  • Destructible Trust
  • Directory Trust
  • Direct Trust
  • Discretionary Trust
  • Donative Trust
  • Dry Trust
  • Educational Trust
  • Equipment Trust
  • Equipment Trust
  • Estate Trust
  • Ex Delicto Trust
  • Executed Trust
  • Executory Trust
  • Express Active Trust
  • Express Private Passive Trust
  • Express Trust
  • Fixed Trust
  • Foreign Situs Trust
  • Foreign Trust
  • Generation Skipping Trust
  • Governmental Trust
  • Grantor Trust
  • Gun Trust
  • Honorary Trust
  • Illusory Trust
  • Imperfect Trust
  • Imperfect Trust
  • Implied Trust
  • Indestructible Trust
  • Insurance Trust
  • Inter Vivos Trust
  • Investment Trust
  • Involuntary Trust
  • Irrevocable Trust
  • Land Trust
  • Life Insurance Trust
  • Limited Trust
  • Liquidating Trust
  • Living Trust
  • Marital Deduction Trust
  • Medicaid Qualifying Trust
  • Ministerial Trust
  • Minnesota Trust
  • Mixed Trust
  • Naked Land Trust
  • Nominal Trust
  • Nominee Trust
  • Nondiscretionary Trust
  • Oral Trust
  • Passive Trust
  • Pension Trust
  • Perpetual Trust
  • Personal Trust
  • Pour Over Trust
  • Power of Appointment Trust
  • Precatory Trust
  • Presumption Trust
  • Private Trust
  • Protective Trust
  • Public Trust
  • Purchase Money Resulting Trust
  • Qualified Terminable Interest Trust
  • Real Estate Investment Trust
  • Reciprocal Trust
  • Remedial Trust
  • Resulting Trust
  • Retirement Benefits Trust
  • Revocable Trust
  • Savings Account Trust
  • Secret Trust
  • Self-Setttled Trust
  • Shifting Trust
  • Short Term Trust
  • Special Trust
  • Spendthrift Trust
  • Split Interest Trust
  • Sprinkling Trust
  • Support Trust
  • Tentative Trust
  • Testamentary Trust
  • Totten Trust
  • Transgressive Trust
  • Unit Investment Trust
  • Unitrust
  • Vertical Trust
  • Veterans Trust
  • Voluntary Trust
  • Voting Trust
  • Wasting Trust

When or if you decide to meet with a lawyer, their role is to help a person find a trust type that aligns with the Grantor’s goals, while addressing many issues likely never considered.