The American legal system offers a particularly rich range of wealth planning tools. Among them, the trust occupies a central place. However, behind this single word lies a multiple reality: there are dozens of types of trusts in the United States, each designed to meet specific objectives, asset protection, tax optimization, transmission to future generations, or even the care of vulnerable people.
In this article, we offer you a sourced overview of the main types of trusts in the United States, so that you can approach your estate planning with clarity and method.
What is a trust?
A trust is a legal arrangement by which one person — the grantor (or settlor) — transfers assets to another person or entity — the trustee — who manages them for the benefit of one or more beneficiaries. It can contain any type of asset: cash, real estate, financial securities, company shares, etc.
As the US federal government website (LTCFEDS) reminds us, "a trust is a legal document used to establish a 'container' that holds assets [...] managed by you or by a trustee until they are transferred to the beneficiaries" (source).
The Great Division: Revocable Trusts vs. Irrevocable Trusts
Before going into the details of each type of trust, it is necessary to understand the fundamental distinction that structures all American trust law.
Le Revocable Living Trust (Trust révocable)
This is the most common form. As the name suggests, the grantor can modify, amend, or revoke it at any time during his lifetime. He retains full control of his assets.
Some of its main advantages:
Avoid probate : the public and often lengthy inheritance procedure that applies to wills. A properly funded revocable trust allows assets to be transferred directly to the beneficiaries, without going to court.
Planning in the event ofincapacity :In the event of a loss of cognitive capacity, the designated successor trustee takes over without judicial intervention.
Confidentiality : unlike a will, a revocable trust does not become a public document.
Its main limitation: the assets remain under the control of the grantor, they are included in his taxable estate and are not protected from creditors (source: U.S. Bank).
L'Irrevocable Trust (Trust irrévocable)
In contrast, the irrevocable trust cannot generally be modified or revoked once created. The grantor relinquishes control over the transferred assets. In return, these assets are no longer part of his taxable estate and benefit from creditor protection (source: FindLaw).
It is this relinquishment of control that generates the tax and protection benefits: "the assets of an irrevocable trust are not considered personal property, which means that they are not included when the IRS assesses your estate" (source: LTCFEDS).
The main types of trusts in the United States
1. Le Living Trust (Trust entre vifs)
Created during the grantor's lifetime, the living trust can be revocable or irrevocable. Its main purpose is to allow a smooth transfer of assets after death, without a probate procedure. It can also cover real estate located in several states, thus avoiding an ancillary probate (inheritance procedure in each state concerned).
2. Le Testamentary Trust (Trust testamentaire)
This type of trust does not exist during the grantor's lifetime: it is created by will and only comes into force upon the grantor's death. It therefore necessarily goes through the probability procedure, but offers great flexibility in organizing the distribution of assets to minor or vulnerable beneficiaries (source: Ohio State University Extension).
3. L'Irrevocable Life Insurance Trust – ILIT
The ILIT is an irrevocable trust specifically designed to hold a life insurance policy. As FindLaw points out, "because the assets of an irrevocable trust are out of reach of the grantor, they are also out of reach to its creditors." By transferring the policy to an ILIT, death benefits are excluded from the grantor's taxable estate, allowing his heirs to receive the entire capital without inheritance tax.
Key point to remember: "the death benefit of a life insurance policy could beincluded in the taxable estate, unless it is held by an ILIT" (source: SK Financial).
4. The Special Needs Trust
The Special Needs Trust (SNT) is designed to help protect the interests of a person with a disability while preserving their access to government benefits like Medicaid and Supplemental Security Income (SSI). If the person directly benefited from the assets, they could lose these essential benefits.
There are two main forms:
First-Party SNT : Funded with the beneficiary's own assets (inheritance, damages). It includes a Medicaid reimbursement clause upon the death of the beneficiary.
Third-Party SNT : Funded by third parties (parents, relatives). No Medicaid reimbursement clause.
From a tax point of view, the IRS treats first-party SNTs as grantor trusts : the income generated is taxed at the beneficiary's marginal rate, and not at the trust rate (which reaches 37% from $15,201 of income in 2024, compared to $609,351 for an individual) (source: TrueLink Financial).
5. The Generation-Skipping Trust
The Generation-Skipping Trust (GST) allows assets to be transferred directly to grandchildren or beneficiaries of lower generations, by "skipping" an intermediate generation. The objective is to avoid double taxation of inheritance (parent → child → grandchild).
This mechanism is governed by the Generation-Skipping Transfer Tax (GSTT), introduced in its current form by Congress in 1986. The One Big Beautiful Bill Act signed on July 4, 2025 increased the GST exemption to $15 million per person effective January 1, 2026, with annual adjustments for inflation (source: Seyfarth Shaw).
6. Le Charitable Remainder Trust – CRT et le Charitable Lead Trust – CLT
These two types of trusts make it possible to combine philanthropy and tax optimization.
Charitable Remainder Trust (CRT): The grantor or its designated beneficiaries receive income from the trust for a set period of time, after which the remaining assets are donated to a charity. The grantor benefits from a tax deduction at the time of creation.
Charitable Lead Trust (CLT): The operation is reversed — the charity collects the income first, and the residual assets revert to the designated beneficiaries (often the family) at maturity.
According to the OBBBA Act of 2025, non-itemizers will now be able to deduct up to $1,000 in charitable contributions ($2,000 for couples) as early as 2026, but contributions via donor-advised funds will not be eligible (source: Seyfarth Shaw).
7. Le Spendthrift Trust
This type of trust protects beneficiaries from themselves — or from their creditors. The trustee strictly controls the distributions, and the beneficiaries cannot sell or pledge their future rights in the trust. However, the rules vary from one country to another in terms of creditor protection (source: Norway Savings Bank).
8. Le Dynasty Trust
The dynasty trust is designed to last for several generations, sometimes indefinitely. Its objective: to accumulate and preserve family wealth over the long term, by minimising inheritance tax for each generation.
As Wikipedia reminds us, "the creation of the GST tax in 1986 and its associated exemption created a strong incentive for wealthy families to use very long-term trusts". Today, states such as Delaware, Nevada and South Dakota have abolished the rule against perpetuities, allowing trusts that are practically unlimited in time (source: Wikipedia - Dynasty Trust).
9. Le Bypass Trust (ou Credit Shelter Trust)
Designed for married couples, the bypass trust allows the estate tax exemption of both spouses to be used, rather than transferring everything to the surviving spouse (who only benefits from their own exemption). Assets placed in the bypass trust upon the death of the first spouse do not form part of the taxable estate of the survivor, although they continue to benefit from them during their lifetime.
In 2026, with the federal exemption set at $15 million per person (or $30 million for a couple), this type of trust becomes particularly relevant for assets above this threshold (source: Kiplinger).
10. L'Intentionally Defective Grantor Trust – IDGT
The IDGT is an advanced tax planning tool. It is intentionally "defective": the trust is irrevocable for inheritance tax purposes (the assets leave the grantor's estate), but it remains a grantor trust for income tax purposes (the grantor continues to pay tax on the income generated by the trust).
In practice, the grantor's payment of income tax is itself a transfer of additional wealth to the beneficiaries — without triggering gift tax. It is one of the most sophisticated tools available to high-income taxpayers.
The tax context in 2025-2026: what is changing
The planning around trusts is not frozen in time. The One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, has profoundly changed the tax landscape:
The federal estate tax exemption increases to $15 million per person as of January 1, 2026 (from $13.99 million in 2025), with annual adjustments for inflation.
For couples, this represents a combined $30 million exemption through portability.
The federal rate on estates above these thresholds remains at 40%.
17 statesmaintain their own estate or inheritance tax, independent of the federal level (source: Kiplinger).
These figures illustrate why irrevocable trusts remain an essential tool for large assets, and why estate planning is not reserved for the ultra-rich: a sustained real estate valuation, a family business, or growing financial assets can quickly cross the thresholds concerned.
How to choose the appropriate type of trust?
There is no one-size-fits-all answer. As CMRS Law points out, "the answer depends on your objectives, and usually involves more than one type of trust" — several trusts can coexist within the same estate plan (source).
Here are some key questions to help guide your thinking:
Do you want to maintain control of your assets during your lifetime? → Revocable Trust.
Do you need to protect assets from creditors or lawsuits? → Irrevocable Trust.
Do you have a beneficiary with a disability? → Special Needs Trust.
Do you want to pass on your wealth over several generations? → Dynasty Trust or Generation-Skipping Trust.
Do you want to combine philanthropy and tax optimization? → Charitable Remainder Trust or Charitable Lead Trust.
Do you have a significant life insurance policy? → ILIT.
In summary
The trust is much more than just a tool for the transmission of assets: it is a flexible legal mechanism, capable of adapting to a wide variety of personal, family and tax situations. Understanding the differences between a revocable and irrevocable trust, or between an ILIT and an SNT, is the first step to making informed decisions with your legal and tax advisor.
With $84 trillionin intergenerational transfers in the U.S., the stakes have never been higher—and the tools more powerful.
This article is provided for informational purposes only and does not constitute legal or tax advice. For any wealth planning decisions, consult an attorney specializing in inheritance law and a qualified tax advisor.
Sources
Future written communications may be in English only.Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice. Guardian and its subsidiaries do not provide tax or legal advice. Individuals should seek advice from their own qualified tax and legal professionals regarding their specific situation and any strategies discussed. 8967228.1 Exp 6/28