Trusts - Overview & Types

Testamentary Trusts   The concepts of wills and trusts combine when you consider the creation of a Testamentary Trust. These trusts are created under your will and control the management of your assets after your death. These trusts have a wide array of uses, but they are very often used to provide for the management of assets for minors and young children in the event they might become entitled to receive property under a will. 

Special Needs Trusts  Special Needs Trusts help enhance the life of your special needs child and your own life. This tool is also essential in helping protect your child’s qualification for government benefits. Because these documents are complex, we encourage you to check out our Special Needs Trust information summary for more information.  

Miller Trusts  In Texas, if your income is more than the monthly amount Medicaid permits, special rules allow you to re-direct your income to a legal tool called a Miller Trust or Qualified Income Trust (QIT).  This legal planning document allows you to meet income eligibility rules for Medicaid nursing home benefits.  If you don’t set up this type of trust,  your income cannot be more $2,250 per month in order to meet Medicaid’s 2018 eligibility requirements. This type of trust offers many benefits–check out our separate summary on Miller Trusts to learn more.   

Third Party Trusts  We answer questions about Third Party Trusts in relation to qualifying for Medicaid payment for nursing home care. Learn more about Third Party Trusts and how this legal tool may affect eligibility for government benefits in our separate summary.   

Educational Trusts   One of the primary concerns that many parents and grandparents have is setting aside money to provide for education for their children and grandchildren. In spite of this desire, those same parents and grandparents recognize that the best interests of their children is not served by giving large sums of money to minors or young adults who might rather buy a car than pay for an education. As a result, the use of an Educational Trust becomes a very appropriate option for providing money for education while making sure the money is used appropriately. 

Spendthrift Trusts   Another concern of people creating trusts is that they want the assets of the trust to be protected from the attacks of potential creditors of either the Grantors or the Beneficiaries of the Trust. Spendthrift provisions can be incorporated into a Trust, which will then protect the trust assets from attack. 

Crummey Trusts   People making gifts into Trusts generally make those gifts for a variety of reasons. However, regardless of the reason, they do not want to give up their money and pay gift taxes on top of giving away their money. The Crummey trust provisions make it possible to make gifts to a trust while excluding some portion or all of the gift from potential gift tax complications. 

Revocable Living Trusts   In recent years, the use of Revocable Living Trusts as a substitute for traditional estate planning has exploded in many states. In Texas, however, these trusts as effective estate planning alternatives have limited usefulness. 

Irrevocable Life Insurance Trusts   Life insurance policies can very often present estate tax problems for the person who owns the policy. To combat the estate tax complications, the Irrevocable Life Insurance Trust provides an alternative to own a life insurance policy while completely excluding the proceeds from the estate for tax purposes.