Using trusts to pass on homes and various other assets will cut taxes and may be worth a look for many. There are myriad tax shelter trusts, including the credit shelter, charitable and life insurance trusts. One of the most popular is the credit shelter or bypass trust. The appreciated assets in the trust that are distributed to the children are also tax-free. A complex tool is the qualified personal residence trust, which can be used to reduce property taxes on a home that a parent might want to pass on to children or grandchildren.
Charitable trusts allow passage of assets to charity in various ways.
Most commonly, a trust is organized so a charity will receive a percentage of the assets either up front or after an extended period of time. In a lead charitable trust, the grantor specifies the pay-out amount and the length of time to the charity. At the end of the period, the remainder of the trust can be distributed to family members. In a remainder trust, family members may be able to use the trust assets with the remainder going to a charity at the end of a given time frame. Another tax shelter is the insurance trust.