Common Trusts, Uncommon Benefits

Ordinary Trusts and Their Uncommon Benefits 
No two trusts are exactly alike. Here are representative samples of what can be achieved with a trust. 
Beneficiary  Type of trust or account  Tax benefits?  Other benefits 
Yourself  Revocable living trust  None  Professional asset management, continuous financial protection upon incapacity. Avoids probate in many states. 
Investment management account  None Easy to set up, gain perspective of investment professionals. 
Your spouse  Marital deduction trust  Full estate tax deferral in most cases  Spouse receives all trust income at least annually, may direct ultimate distribution of trust assets. 
Qualified domestic trust  Full estate tax deferral  Spouse must receive all trust income. 
Qualified terminable interest property trust (QTIP trust)  Full estate tax deferral  Especially appropriate for “blended families.” Children’s interests normally can’t be changed by spouse. 
Your family  Bypass trust No federal estate tax, possibly for decades  Surviving spouse may also be a beneficiary. 
Spendthrift trust None Trust assets are protected from the beneficiary’s creditors. 
Special needs trust  None May provide for enhanced quality of life while permitting continued government benefits. 
Grantor retained annuity trust (GRAT)  Income and estate tax savings  Grantor’s retained interest reduces gift tax exposure. Assets may be removed from estate taxation. 
Your favorite charity, plus yourself and/or family members  Charitable remainder trust  Income, gift, and estate tax deductions  Income interest may be a percentage of the trust’s value or a fixed dollar amount.