Trust (All Types)

Bankruptcy Estate (Individual)

A bankruptcy estate is a separate and distinct taxable entity from the individual debtor, created when an individual debtor files for bankruptcy under Chapter 7 or 11. When an individual files for bankruptcy under these chapters of the bankruptcy code, a separate estate is created consisting of property held by the debtor as of the beginning of the case. Under some circumstances, this estate also consists of property acquired by the debtor and the estate after commencement of the case.

Conservatorship

A Conservatorship is a trust created as the result of a legal process in which the court appoints an individual or organization to make financial decisions for another person who is determined to be financially incapable of making those decisions. A person under conservatorship is a conservatee, or protected person.

Charitable Lead Unitrust

A Charitable Lead Annuity Trust is one form of a charitable lead trust. The overarching term “charitable lead trust” refers to an arrangement in which property income or investment income is given to a charity while the grantor is living, but the principal passes to other designated parties upon the grantor’s death.

In a Charitable Lead Annuity Trust, the trust pays a fixed percentage of the initial value of its assets to the charity for the charitable term.

Custodianship

A Custodianship is a Trust set up for a minor or incapacitated person.

Charitable Lead Unitrust

A Charitable Lead Unitrust is one form of a charitable lead trust. The overarching term charitable lead trust refers to an arrangement in which property income or investment income is given to a charity while the grantor is living, but the principal passes to other designated parties upon the grantor’s death.

In a Charitable Lead Unitrust, the trust pays a percentage of the value of its assets, determined annually, to a charity for the charitable term.

Escrow

Escrow is a legal arrangement whereby an asset (often money, but sometimes other property such as art, a deed of title, website, or software source code) is delivered to a third party (called an escrow agent) to be held in trust pending a contingency or the fulfillment of a condition or conditions in a contract. When the set condition or conditions are met, the escrow agent delivers the asset to the proper recipient; otherwise the escrow agent is bound by his or her fiduciary duty to maintain the escrow account.

Charitable Remainder Annuity

A Charitable Remainder Annuity Trust is one form of a charitable remainder trust. The overarching term “charitable remainder trust” refers to an arrangement in which property or money is donated to a charity, but the donor (called the grantor) continues to use the property and/or receive income from it while living.

In a Charitable Remainder Annuity trust, the trust pays a fixed dollar amount to charity annually.

Guardianship

A guardian is a person who has the legal authority (and the corresponding duty) to care for the personal and property interests of another person, called a ward. Usually, a person has the status of guardian because the ward is incapable of caring for his or her own interests due to infancy, incapacity, or disability.

Generally, the parents of a minor child are the legal guardians of that child and can designate who shall become the child’s legal guardian in the event of their death.

Charitable Remainder Annuity

A Charitable Remainder Unitrust is one form of a charitable remainder trust. The overarching term “charitable remainder trust” refers to an arrangement in which property or money is donated to a charity, but the donor (called the grantor) continues to use the property and/or receive income from it while living.

In a Charitable Remainder Unitrust, the trust pays a fixed percentage of its value to charity annually.

Irrevocable Trust

In an Irrevocable Trust the grantor has no control of the trust (the trust cannot be repealed or annulled) and the trust will pay tax.

Qualified Funeral Trust

A Qualified Funeral Trust (QFT) is a grantor trust, where the grantor purchases funeral services prior to death, and the applicable funeral home files one income tax return for all separate trusts. The trust is treated as a non-grantor trust if the following conditions are met:

• The trustee makes an election under IRC section 677(a)(3)
• Each trust is treated separately for tax rates
• The contributions are invested for funeral services of the stated person only

Receivership

A Receivership is a legal or equitable proceeding in which a receiver is appointed for any organization or other legal structure to preserve its assets for the benefit of affected parties.

Settlement Fund (under IRS Sec 468B)

A designated settlement fund or qualified settlement fund is a trust or fund established under IRC Sec 468B. This code section permits a defendant to deposit money or property into a trust or fund and receive a full and complete release of liability.

Revocable Trust

A Revocable Trust is a trust that may be altered or terminated during the grantor’s lifetime. Since the trust may be altered at any time until the grantor’s death, it is considered part of the grantor’s estate and is subject to taxation. The property is passed on to the beneficiaries only after the grantor’s death, and the revocable trust then becomes irrevocable.

Trust (All Others)

A trust is a legal entity created under state law and taxed under federal law in which one party holds assets for the benefit of another. A trust is required to file a Form 1041 (U.S. Income Tax Return for Estates and Trusts) to report its income, deductions, gains, and losses.