There are several types of trusts that you can set up in New York. Each trust serves a different purpose and has its own set of rules and regulations. Common types of trusts are revocable trusts and irrevocable trusts. Less commonly known trusts include charitable trusts and generation-skipping trusts.
A revocable trust can be terminated or altered by the grantor at any time. This type of trust is created during the grantor’s lifetime and becomes effective immediately, and is often used to avoid probate and to provide for the management of assets in the event of the grantor’s incapacitation.
On the other hand, an irrevocable trust generally cannot be altered or terminated by the grantor once it has been created. This type of trust is often used for estate planning purposes and to protect assets from creditors.
A testamentary trust is formed through a will and is effective upon the death of the grantor. This type of trust provides for minor children or other beneficiaries who cannot manage their own assets.
Special needs trust
A supplemental needs trust also referred to as a special needs trust, is specifically designed to provide for the needs of individuals with disabilities, without disqualifying them from receiving government benefits such as Medicaid and Supplemental Security Income.
Establishing a charitable trust is to promote a charitable cause or organization. This trust is typically irrevocable, which means it cannot be altered or terminated.
A generation-skipping trust (GST) is a type of trust which skips a generation of beneficiaries and pass assets directly to the next generation. GSTs are typically established as irrevocable trusts and are used to transfer wealth to grandchildren while minimizing estate and gift taxes.