Trusts are powerful tools in estate planning—especially for those with substantial assets. At Lyntax Group, we help clients create customized trust strategies designed to protect wealth, minimize taxes, and preserve family legacies across generations. Below are eight essential types of trusts, with in-depth explanations and real-world examples that show how they may be applied:
1. Revocable Living Trust
Flexible, private, and probate-free
A Revocable Living Trust allows you to retain full control of your assets during your lifetime. You can amend, modify, or revoke the trust at any time. Upon your death, assets pass directly to beneficiaries without going through probate, which saves time, maintains privacy, and avoids court involvement.
Use Case: Best suited for individuals who want to maintain flexibility while ensuring their estate is efficiently administered.
Client Example 1: A retired tech entrepreneur wants to maintain control over her investment portfolio and vacation properties, while ensuring a smooth transition of wealth to her adult children without court involvement.
Client Example 2: A widow wants to avoid probate and protect her real estate holdings for her two sons while retaining full access and control over her assets during her lifetime.
2. Irrevocable Life Insurance Trust (ILIT)
Remove life insurance from your estate
An ILIT is designed to own life insurance policies outside of your taxable estate. This means the policy proceeds will not be subject to estate taxes upon death. It can also provide liquidity to pay estate taxes or support beneficiaries.
Use Case: Ideal for high-net-worth individuals with large life insurance policies who want to reduce estate taxes and protect policy proceeds.
Client Example 1: A business owner holds a $10M life insurance policy. He creates an ILIT so the policy proceeds can be used to pay estate taxes without increasing the value of his taxable estate.
Client Example 2: A physician creates an ILIT to ensure the life insurance proceeds go directly to a trust for his children, protecting them from creditors and poor financial decisions.
3. Grantor Retained Annuity Trust (GRAT)
Shift appreciation to beneficiaries with minimal tax impact
A GRAT allows you to transfer appreciating assets to heirs while receiving annuity payments for a fixed term. If the assets appreciate more than the IRS’s assumed interest rate, the excess growth passes to beneficiaries with little or no gift tax.
Use Case: Effective when transferring assets expected to appreciate rapidly, such as startup equity or real estate.
Client Example 1: A real estate investor expects a large increase in property values. She places the properties into a GRAT to “lock in” the current low valuation, transferring future gains to her children with minimal gift taxes.
Client Example 2: A biotech founder anticipating a major IPO uses a GRAT to transfer pre-IPO shares to his children, minimizing gift tax liability.
4. Charitable Remainder Trust (CRT)
Receive income now, give to charity later
A CRT allows you to donate assets to a trust and receive an income stream for a term of years or life. At the end of the term, the remainder goes to a designated charity. This setup avoids capital gains taxes on donated assets and can offer an immediate charitable deduction.
Use Case: Ideal for clients who are philanthropically inclined and want income during retirement while avoiding capital gains taxes on appreciated assets.
Client Example 1: A retired couple owns highly appreciated stock. They donate it to a CRT to avoid immediate capital gains taxes, receive income for life, and eventually benefit a local hospital foundation.
Client Example 2: A single executive nearing retirement uses a CRT to convert appreciated commercial real estate into a diversified investment portfolio while generating retirement income and benefiting a local arts nonprofit.
5. Charitable Lead Trust (CLT)
Give to charity now, transfer assets to heirs later
A CLT is the reverse of a CRT. It pays income to a charity for a fixed term, after which the remaining assets are transferred to non-charitable beneficiaries (e.g., children or grandchildren). It reduces the taxable estate and may provide gift or estate tax benefits.
Use Case: Useful for clients with a strong charitable intent who also want to eventually pass assets to heirs at a reduced tax cost.
Client Example 1: A high-income executive wants to support her alma mater over the next 20 years while ultimately transferring assets to her grandchildren. A CLT allows her to do both efficiently.
Client Example 2: A real estate developer donates income from a commercial building to a museum foundation for 15 years, then transfers ownership of the building to his heirs.
6. Generation-Skipping Trust (GST)
Avoid double estate taxation across generations
A GST allows assets to skip one or more generations (e.g., from grandparents directly to grandchildren), avoiding estate taxes that would apply if passed down through each generation. These trusts can be structured to last multiple generations and shield assets from creditors and divorce.
Use Case: Valuable for families who want to protect multigenerational wealth and minimize estate tax exposure.
Client Example 1: A family patriarch wants to leave a legacy for his grandchildren while bypassing estate taxes that would apply if assets first passed to his adult children. A GST trust allows this transfer with optimal tax efficiency.
Client Example 2: A wealthy couple creates a GST to transfer $15M in investment assets to their grandchildren, ensuring long-term wealth preservation and asset protection from future divorces.
7. Qualified Personal Residence Trust (QPRT)
Transfer your home at a reduced tax cost
A QPRT is used to transfer a personal residence or vacation home to heirs at a discounted gift value while retaining the right to live in the home for a fixed period. After the term ends, the property passes to beneficiaries.
Use Case: Ideal for clients with high-value homes who want to reduce estate taxes while continuing to live in the residence.
Client Example 1: A couple nearing retirement owns a beach house valued at $5M. By transferring it to a QPRT, they lock in a lower gift tax value while continuing to enjoy the property during the trust term.
Client Example 2: A CEO transfers his family estate into a QPRT, maintaining use of the property for 10 years while reducing the value subject to estate tax.
8. Special Needs Trust
Protect benefits for loved ones with disabilities
A Special Needs Trust provides supplemental financial support to individuals with disabilities without disqualifying them from public benefits such as Medicaid or Supplemental Security Income (SSI).
Use Case: Critical for families with disabled children or relatives who require lifelong support and care.
Client Example 1: A family with a child diagnosed with autism creates a Special Needs Trust to ensure long-term care and quality of life without jeopardizing eligibility for public benefits.
Client Example 2: A grandfather leaves an inheritance to a granddaughter with cerebral palsy in a Special Needs Trust to protect her access to medical support programs.
Partner with Lyntax Group
Whether your goals include multigenerational wealth transfer, charitable giving, tax mitigation, or protecting loved ones, the right trust structure can make all the difference. At Lyntax Group, we work with you to design estate planning strategies tailored to your unique vision and values.