Rabbi Trust

A trust created for the purpose of supporting the non-qualified benefit obligations of employers to their employees.

These trusts are sometimes referred to as "grantor trusts".

Investopedia Says:
Called a Rabbi trust due to the first initial ruling made by the IRS on behalf of a synagogue, these forms of trusts create security for employees because the assets within the trust are typically outside the control of the employers and are irrevocable.

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Trust named from a private-letter ruling by the IRS that involved a trust established by a Jewish congregation on behalf of its rabbi. The operation of the trust involves the employer's making contributions to the trust that are irrevocable. An independent trustee has control of the trust and must pay benefits from it if a stipulated event occurs, such as the death, disability, or retirement of the employee. If the employer becomes bankrupt or insolvent, the funds held in the trust are subject to the claims of the employer's creditors. The employer cannot take income tax deductions for its contributions to the trust until the funds in the trust are actually distributed to the employee.

Any trust other than one created by a Will. In the Secondary Mortgage Market and securitized asset sales market, a grantor trust is a legal, passive entity through which pass-through securities are sold to investors. Grantor trusts are not subject to taxation.