Types of Trusts
Trusts can be designed for many different types of financial and personal situations. A brief description of seven of the more typical trust arrangements is provided below. We encourage you to contact MEMBERS Trust Company FSB, Western Division to learn more about how each type of trust works and to determine if a trust is right for you.
A/B-Credit Shelter Trust
Incentive Trust
Generation-skipping Trust
Living Trust
Qualified Terminable Interest Property Trust (Q-TIP Trust)
Charitable Remainder Trust
Irrevocable Life Insurance Trust
A/B-Credit Shelter Trust
This trust is designed to allow a husband and wife each to take advantage of estate tax exemptions ($1,000,000 per person, as of January 1, 2002). The trust is commonly used to reduce estate taxes.
Incentive Trust
This is a trust that can help your children manage substantial assets at an early age. It can be designed to distribute funds to them in installments, at specified points in their lives. The trust may also include provisions to allow earlier lump-sum distributions tied to your child's income level, educational achievement, or other incentive criteria.
Generation-skipping Trust
This trust may be designed to fund your grandchildren's education or special needs and to limit the tax liability for those of your children who have their own sizeable taxable estates. Your surviving spouse and/or children can receive income throughout their lives. The trust terminates when your surviving spouse and/or children have died or reached a specified age; then assets are distributed to your grandchildren.
Living Trust
The Revocable Living Trust is the classic tool for avoiding probate and for providing asset management in the event that you become disabled. This trust is particularly useful if you own property in more than one state.
Qualified Terminable Interest Property Trust (Q-TIP Trust)
If you are a parent in a new marriage, the Q-TIP Trust allows you to make provisions for the children from an earlier union. It will provide your surviving spouse with income throughout his or her life, while guaranteeing that after your spouse dies, the balance of the trust assets will pass to the children of your first marriage. Proper use of this trust may also avoid death taxes.
Charitable Remainder Trust
This trust arrangement will allow you to both provide for a beneficiary and support your favorite charity. The trust will distribute income to your beneficiary over his or her lifetime. At your beneficiary's death, the trust terminates and the remainder passes to the charity.
Irrevocable Life Insurance Trust
If your family-owned business or farm is a large part of your estate, this trust is permitted to buy life insurance on your life. If properly drafted, the proceeds of the policy are not included in your estate for estate tax purposes, but can provide a source of liquidity for your surviving spouse and family.
Trust services provided by MEMBERS Trust Company. Trust products are not federally insured, are not obligations of or guaranteed by the credit union or any affiliated entity, involve investment risks, including the possible loss of principal.