Types of Trusts
Options to fulfill your estate planning goals
Trusts are powerful estate planning tools that can help you manage assets during your lifetime, provide for loved ones, support charitable goals, and simplify the transfer of wealth. Different types of trusts serve different purposes, and the right structure depends on your personal, family, and financial goals.
Our Wealth Management team works alongside your legal and tax advisors to help ensure your trust strategy fits your overall plan.
Revocable Trust
A revocable trust—often called a living trust—is a trust you can change, amend, or cancel at any time during your lifetime. With a revocable trust, you:
- Typically serve as both trustee and beneficiary while you are alive
- Maintain full control of your assets
- Continue to receive all income and benefits from the trust
One of the primary advantages of a revocable trust is that it allows assets to transfer at death without going through probate, the court-supervised process required for wills. Avoiding probate can save time, reduce costs, and provide privacy for your family.
Upon your death, the trust becomes irrevocable, meaning its terms can no longer be changed. At that point, a successor trustee manages and distributes the trust assets according to your instructions. To learn how Citizens Bank & Trust can serve as successor trustee of your trust, contact our Wealth Management team today.
Irrevocable Trust
An irrevocable trust generally cannot be changed or canceled once it is created. While this may sound restrictive, irrevocable trusts often offer significant benefits and flexibility when designed properly.
Irrevocable trusts are commonly used to:
- Hold life insurance policies
- Transfer assets to beneficiaries at a future date
- Make charitable gifts
- Reduce estate taxes and protect assets
Because these trusts are structured to comply with specific rules under the Internal Revenue Code, they can provide meaningful tax advantages when used appropriately. Designing an irrevocable trust requires careful planning, and decisions should be made with the guidance of qualified legal and tax advisors.
Charitable Trusts
Charitable trusts have long been a cornerstone of effective estate and philanthropic planning. These trusts allow you to support charitable causes while also addressing personal or family financial needs.
Charitable trusts typically divide ownership benefits into two parts:
1. Income Interest
One or more beneficiaries receive regular income payments for a set number of years or for life.
2. Remainder Interest
One or more charitable organizations receive the remaining assets after the income period ends.
Both the income interest and the charitable remainder can often be valued for income, gift, or estate tax purposes, potentially providing tax benefits.
There are many types of charitable trusts, each with different tax and planning implications. A successful charitable trust strategy is one that aligns your charitable intentions with your broader financial and family objectives.
Special Needs Trusts
Families with a loved one who has a disability face unique estate planning challenges. The goal is often twofold:
- Provide long-term financial support
- Preserve eligibility for government benefits such as Medicaid and Supplemental Security Income (SSI)
Leaving assets directly to a person with special needs can unintentionally disqualify them from these benefits. At the same time, disinheriting them may leave insufficient resources for their care. Informal arrangements—such as leaving assets to other family members with verbal instructions—can expose funds to creditors, lawsuits, or divorce.
A special needs trust is often the most effective solution, and there are two basic types of special needs trusts:
1. First-Party
A first-party special needs trust is funded with the beneficiary’s own assets, such as compensation awarded to the beneficiary from a lawsuit or settlement agreement. These trusts generally do require reimbursement to the state for Medicaid expenses upon the beneficiary’s death.
2. Third-Party
A third-party special needs trust is funded with assets belonging to parents, grandparents, or others. This type of trust should be established to ensure that an inheritance from a third-party does not disqualify the beneficiary’s eligibility for government benefits. Generally, these types of special needs trusts do not require repayment to Medicaid.
Special needs trust laws vary by state and are highly technical, making experienced legal guidance essential.
When administered by a corporate trustee, such as Citizens Bank & Trust, special needs trusts benefit from professional asset management, consistent oversight, and long-term continuity—helping protect the beneficiary’s financial security over time.
Estate Planning & Administration
Estate planning is the process of organizing your financial affairs to protect your assets and pass them on according to your wishes. It is a highly personal process that can affect your family for generations.
Our Wealth Management team can help you:
- Coordinate the use of wills and trusts
- Structure your estate to reduce taxes where possible
- Plan charitable gifts for maximum impact
- Ensure assets are properly titled and aligned with your plan
We can also serve as Executor (also called the “Personal Representative” in some cases) of your estate. This role involves managing assets, working with the probate court, and carrying out the instructions in your will—often during an emotional and difficult time for loved ones.
Having experienced trust professionals handle these responsibilities can provide peace of mind and relieve your family of a significant administrative burden.
Reach out to learn how our Wealth Management professionals can help you achieve your goals.