How Many Different Types of Trusts Are There?
When most people hear the word trust, they picture something only the ultra-wealthy set up to pass down massive fortunes. The truth? Trusts are for everyday families too and they come in many shapes and sizes.
In fact, there are currently more than 138 different types of trusts in the U.S. Because a trust is essentially a legal contract, it can be designed to handle just about anything, from protecting pets, to transferring real estate, to safeguarding insurance policies.
Common Types of Trusts
- Life Insurance Trust (ILIT): Holds your life insurance policy outside of your taxable estate, protecting your loved ones from estate taxes.
- Qualified Personal Residence Trust (QPRT): Often used for a second home, this allows you to transfer the property at a reduced tax cost.
- Qualified Terminal Interest Property Trust (QTIP): Ideal for blended families, ensures a surviving spouse is financially protected while preserving assets for children from previous relationships.
- Charitable Remainder Annuity Trust (CRAT/GRAT): Provides income for a set period, with the remainder going to charity.
- Intentionally Defective Grantor Trust (IDGT): A complex estate-planning tool often used to reduce tax burdens while transferring wealth to the next generation.
- Qualifying Income Trust (QIT, sometimes called a Miller Trust): Required in many states for Medicaid long-term care eligibility.
What You Might Have Heard About Trusts
“Trusts are only for the wealthy.”
False. Trusts aren’t just for the wealthy; they’re tools to protect any family. For example, someone receiving SSI can only have $2,000 in assets. If they inherit money directly, they risk losing benefits. But with the right type of trust, that inheritance can be protected and eligibility maintained.
“A will is enough to avoid probate.”
Not true. In fact, following a will requires probate. A will tells the court your wishes, but it doesn’t avoid the costly, time-consuming legal process. Even worse, in some cases, a surviving spouse can elect against the will, taking 50% of everything regardless of what was written. For blended families, this can create heartbreaking conflicts. Learn more about the difference between a will and trust here.
“Trusts are too expensive.”
Compared to probate, a trust is often less expensive in the long run. Probate costs, court fees, and delays can drain an estate, whereas a properly set up trust avoids all of that.
What is Probate?
Probate is the legal process of distributing assets after someone dies. If you have a valid will, the court supervises that process. If you don’t, the state decides who inherits under intestacy laws. Either way, probate is public, often slow, and can be costly.
Benefits of a Trust
Creating a trust puts you in control and it keeps things private and out of court. Some of the biggest advantages include:
- Family peace of mind
- Cannot be elected against by a spouse
- Specific distributions (e.g., grandchildren receiving funds in stages—at 25, 30, and 35—instead of all at 18)
- Preserve tax benefits (property tax rates, capital gains exclusions, homestead exemptions)
- Protection from creditors (in case of large business holdings)
- Privacy (no public court record)
- Avoid probate and estate tax
- Maintain benefit eligibility (SSI, Medicaid, etc.)
- Flexibility and preservation of options
What Trust is Right For You? Irrevocable vs. Revocable Trusts
When deciding between trusts, the first question is: What’s your goal? The question isn’t what type of trust do I need; it is what are you trying to accomplish?
Irrevocable Trust: Managed by someone else. Once assets are transferred in, you can’t easily change the terms. But in exchange, you get stronger protections, including shielding assets for Medicaid eligibility and reducing estate taxes.
Revocable Living Trust (RLT): You remain in control as your own trustee. Accounts and property function almost exactly as they did before, except now they’re titled in the trust’s name. Flexible and easy to update as life changes.
Want to learn more about the differences between these two types of trusts? Watch our full webinar, Irrevocable vs. Revocable Trusts: Which is Right For You?, where Attorney Scott Collins breaks it down with real-life examples.
Steps to Setting Up a Trust
- Identify Your Goals – Are you avoiding probate, protecting benefits, or planning for long-term care?
- Choose the Right Type of Trust – Different goals require different structures.
- Select a Trustee – Pick someone responsible and trustworthy.
- Fund the Trust – Retitle your accounts, property, or insurance into the trust’s name.
- Review and Update Regularly – Life changes—so should your trust.
Final Thoughts
There may be 138 different types of trusts, but you don’t need to know them all. You only need to know which one is right for your family. Whether your goal is to protect your children, qualify for Medicaid, or avoid probate, the right trust can give you peace of mind and long-term security.
Why Elder Law Guidance Can Assist You
Choosing the right trust isn’t just about paperwork, it’s about protecting your family, your assets, and your peace of mind. At Elder Law Guidance, our team has guided countless Kentucky families through the process of setting up trusts tailored to their unique goals.
We can help you:
- Understand which type of trust fits your needs—revocable, irrevocable, or specialized
- Avoid costly mistakes that could put your estate or benefits at risk
- Protect your home, retirement savings, and family legacy
- Ensure your wishes are carried out with as little court involvement as possible
Whether you’re planning ahead or facing an immediate need, we’re here to walk you through each step with clarity and compassion.
Contact Elder Law Guidance today to schedule a consultation and learn how the right trust can give you and your family long-term security.
Still have questions? Our webinar, Irrevocable vs. Revocable Trusts: Which is Right For You?, is available on-demand and goes into more detail about how to set up a trust in Kentucky and protect your family’s future.
Want to Go Deeper? Join Our Upcoming Webinar
On October 7, we’re hosting a live webinar:
“How to Leave Money to Your Kids Without Screwing Up Their Lives.”
In this session, we’ll go beyond the basics of trusts and talk about how to do estate planning the right way. From choosing between wills and trusts, to structuring inheritances so they help (and don’t harm) your loved ones, this webinar will give you clear, practical strategies to protect your family’s future.
