A trust that funds a promise by a company to pay deferred compensation to its executives. When properly structured, a rabbi trust successfully defers income for the executives while protecting the assets contributed to the trust from all but specific creditors of the company. The assets in the trust must remain subject to the company's general creditors in the event of the company's bankruptcy or insolvency. The contributions and earnings are not taxable to the executives and the company does not get a deduction for its contributions. The earnings from the trust's investments are taxable to the company.

For a model rabbi trust agreement, see Standard Document, Model Rabbi Trust Agreement.