Various Trusts Defined

1. bypass trust (def): A trust into which a decedent's estate passes, so that the surviving heirs get a life estate in the trust rather than the property itself, in order to avoid taxes on an estate larger than the tax-credit-sheltered amount ($3.5 million in 2009, expected to decrease to $1 million in 2011).  Also called the credit-shelter trust.
2. charitable-remainder trust (def): A trust that consists of assets that are designated for a charitable purpose and that are paid over to the trust after the expiration of a life estate or intermediate estate.
3. generation-skipping trust (def): A trust that is established to transfer assets to a skip person (a beneficiary more than one genration removed from the settlor).  This type of trust is subject to generation-skipping transfer taxes.
4. inter vivos trust (def): A trust that is created and takes effect during the settlor's lifetime.  Also called a living trust.
5. irrevocable life-insurance trust (def): An irrevocable, living trust funded by one or more life insurance policies that removes the proceeds of the policies from the settlor's estate, thereby mitigating transfer/estate taxes.
6. irrevocable trust (def): A trust that cannot be terminated by the settlor once it is created.
7. marital-deduction trust (def): A testamentary trust created to take full advantage of the marital deduction.
8. pourover trust (def): An inter vivos trust that receives property from a will upon the testator's death.
9. power-of-appointment trust (def): A trust used to qualify property for the marital deduction, under which property is left in trust for the surviving spouse.
10. QTIP trust (def): A testamentary trust established to transfer assets (also called qualified terminable-interest property (QTIP)) between spouses when one spouse dies.  
11. revocable trust (def): A trust in which the settlor reserves the right to terminate the trust and recover the trust property and any undistributed income.
12. spendthrift trust (def): A trust that prohibits the beneficiary's interest from being assigned and also prevents a creditor from attaching that interest.
13. sprinkling trust (def): A trust in which the trustee has discretion to decide how much will be given to each beneficiary.
14. testamentary trust (def): A trust that is created by a will and takes effect when the settlor (testator) dies.  Also called a trust under will.
15. testamentary life-insurance trust (def): A testamentary trust consisting of one or more life insurance policies payable to the trust when the insured dies.