Many Washington state residents use trusts as an estate planning tool. A trust is flexible and can take effect during life (living trust) or after death. Trusts shield assets from probate and offer tax advantages. A living trust takes place during the trustor’s life.
Learn about four common types of living trusts in Washington state when planning your estate.
Grantor-retained income trust
In estate planning language, a grantor is the person who creates the trust. A GRIT (grantor retained income trust) gives the grantor you rights to earn income from the property. The grantor’s income rights last for the duration of the trust or a defined period. The GRIT trust transfers the property title.
A QPRT (qualified personal residence trust) is a GRIT variant that transfers property ownership to the beneficiary. The QPRT also allows the current owner to collect property income.
A Crummey trust allows the grantor revocation rights from 60 to 90 days. It also limits the beneficiary’s access to the gift as well. This trust offers the beneficiary an option to accept or reject the right to withdraw the funds. This tool is opposite of the common practice of direct transfers.
Qualified terminable interest property
A QTIP (qualified terminable interest property) trust supports the grantor’s second family. A QTIP trust benefits a spouse. A QTIP trust supports a subsequent spouse when existing children have established inheritance.
A land trust is a bankruptcy alternative to shield the property from creditors. The grantor names themselves as the trustee. The grantor keeps control of the trust property. One privacy advantage to this tool is that the trust is the record owner, not the grantor.
You may want to consider trusts as an estate planning tool that will help preserve your assets for the next generation according to your wishes.