What is a Trust?

What a TRUST is from a legal document/legal relationship point of view.

A trust is the formal setting of a relationship between Three Parties.

The Trustor (aka Settlor aka Grantor) – or the person who creates the trust & usually has the assets that are going to go into the trust.

The Trustee – the person who holds legal title to any assets that are transferred to them under the trust.

The Beneficiary – the person for whose benefit the assets are being held.

A Trust in the estate planning world spells out this relationship in the format of a legal document.  This document goes into effect immediately.  It typically starts off with the Trustor in all three of the roles in the beginning – but spells out who the successor trustees would be & at the point of death who the alternate beneficiaries would be.

When used as an estate planning tool – a Trust is a very easy way to arrange your affairs to avoid Probate when you pass away & Conservatorship during your lifetime.

A trust works to avoid those court processes since the Legal Title of your assets was held by the Trustee of your Trust and NOT by you as an individual.

If you’d still been the acting Trustee – the Trust document will spell out who your Successor Trustee would be & they can assume that role through paperwork at the points in time outlined in the Trust –typically – Death, Incapacity or Resignation.

The most common format of a trust in an estate planning context – is a Revocable Living Trust.  The Revocable part is referring to the fact that the trust can be changed/amended by the creator over their lifetime.  The Living (or Intervivos) part is referring to the fact that this type of trust is going to be for the creator’s benefit for the remainder of their lifetime.

There are other types of Trusts that can and may be used in estate planning – but generally speaking these would be In Addition to the foundational revocable living trust – not instead off.  These additional types of trust serve a specific purpose – which may be related to Charitable Intent; Benefit Planning; Estate Tax Avoidance; etc.

So – one meaning of the word TRUST is the legal relationship between different parties, a common tool in the estate planner’s quiver.   When combined with other legal documents it is the foundation of a comprehensive estate plan and can be used to achieve many common goals.

Comments

  1. Mary Groesbeck says:

    Hello…I was given your name by Mike from JP Morgan.
    My husband and I would like to set up a trust and he said you have a workshop in Livermore that we might attend. Can you give us the information to sign up.
    Thanks Mary and Warren Groesbeck.

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