SLAT — Spousal Lifetime Access Trust
Best for: married couples reducing estate tax before 2026
ILIT — Irrevocable Life Insurance Trust
Best for: removing life insurance from taxable estate
CRT — Charitable Remainder Trust
Best for: donors with appreciated assets + charitable intent
GRAT — Grantor Retained Annuity Trust
Best for: transferring appreciating assets at low gift tax cost
Dynasty Trust / Generation-Skipping Trust
Best for: multi-generational wealth transfer — bypassing the estate at each generation
Grantor trust — income taxed to the grantor
A grantor trust is an irrevocable trust where the grantor (the person who funded it) is still treated as the owner for income tax purposes — even though the assets are outside the estate. The grantor pays income tax on trust income personally. This sounds like a burden, but it is actually an additional tax-free gift — the grantor is paying taxes on money that belongs to the trust beneficiaries, further reducing the taxable estate without using any exemption. Most SLATs are structured as grantor trusts for this reason.
Non-grantor trust — trust pays its own taxes
A non-grantor trust is a separate taxpayer — it files its own income tax return and pays taxes on trust income at the compressed trust tax rates (which reach 37% at just $15,200 of income in 2024). Non-grantor trusts are used when the grantor does not want to bear the ongoing income tax liability, when the grantor is in a low-income-tax state and the trust is in a state with no income tax, or when distributions to beneficiaries are the preferred mechanism for managing the trust's tax bill.
| Structure | Primary goal | Requires charitable intent | Spouse access retained | Income to grantor |
|---|---|---|---|---|
| SLAT | Estate tax reduction | No | ✓ Via spouse | No — spouse receives |
| ILIT | Estate-tax-free death benefit | No | No | No |
| CRT | Capital gains deferral + income | ✓ Required | No — grantor receives annuity | ✓ Lifetime annuity |
| GRAT | Transfer appreciating assets | No | No | ✓ Fixed-term annuity |
| Dynasty trust | Multi-generational transfer | No | No | No |