TRUST INCOME TAX CONSIDERATIONS PART 3

Types of Trusts

• Revocable Living Trust (RLT) – This is the standard trust that is revocable during the lifetime of the grantor and become irrevocable on death.
• Bloodline Trust (BLT) – This is a trust that usually take effect on the death of the grantor and is designed to protect children from claims of creditors, divorce, and spendthrift habits.
• Self-Settled Special Needs Trust (SSSNT) – These trusts are used in personal injury cases or inheritances.
• Third Party Special Needs Trust (TPSNT) – These trusts are used for a healthy spouse to leave money to a disabled spouse, or parents to leave funds for children, grandchildren, and other family members or friends with disabilities.
• Health, Education, Maintenance and Support (HEMS) – These are typical support trusts. The key is whether the trustee has absolute discretion in making distributions for the beneficiary’s health, education, maintenance and support, or whether the beneficiary can demand distributions for those purposes.
• Conduit Trust (Conduit) – This is a trust where all of the income must be distributed to the beneficiary.