What is a trust?
A trust is an agreement between the grantor (creator or creators of the trust), and the Trustee (the person appointed to manage trust assets). The Trustee agrees to manage the grantor’s property for the benefit of a third person, the beneficiary. The most common example is a Living Trust where an individual, John Smith, signs a trust agreement (for example, “The John Smith Living Trust”) and then transfers his assets to the trust. Typically, he would act as Trustee during his life. He is also primary beneficiary during his life. He then designates a successor Trustee to take over management of his trust assets at his incapacity or at his death, and also creates the rules for distribution of the trust assets at his death.
A trust is a fiduciary relationship that is created with respect to property or assets. It is a basic concept where one or more persons manage property or assets for the benefit of others. The person that creates the trust is known as the “Settlor” or “Grantor”. The person who manages the Trust is known as the Trustee. The persons for whom the Trust is created are known as the Beneficiaries. An Asset Protection Trust is aptly named because a Settlor who transfers assets into a trust can by the design and location of the trust achieve a higher level of protection than other devices may offer.
A trust is a written expression of your estate planning wishes expressed in a contract form which avoids probate, and which has effect both during your lifetime and after death. A trust is a private document and property held in the name of the trust does not have to go through probate. When used as the centerpiece of an estate plan, a declaration of trust (sometimes also called a living trust or an inter vivos trust) is signed by you “declaring” yourself as the trustee of the property held in the trust. The trust then goes on to describe your power and authority over the trust during your lifetime (usually your power over this type of trust is absolute), and to name a successor trustee to act to carry out your wishes if you become disabled or after your death. After your death, the trust carries on but the beneficiaries of the trust change to the persons you name. You can make very elaborate provisions for these beneficiaries lasting for generations or can provide for distribution of
A trust is a business structure whereby the trustee holds property and earns and distributes income on behalf of the beneficiaries. One of the most common types of trusts is a family trust. The trustee (usually a company) owns the property and distributes income to the beneficiaries of the trust, who are usually family members. In this way a person who would otherwise earn a large taxable income can split his or her income between family members.
A trust is brought into existence when a person (called the ‘settlor’) transfers some of his assets to trustees (who become the legal owners) for the benefit of third parties, called ‘beneficiaries’ (the beneficial owners). A trust is a legal entity in itself. Another word for a trust is a settlement. Sometimes trusts are created under a will and sometimes they are created during the lifetime of the settlor. Sometimes trusts are created to save tax, sometimes to protect assets; there are many and various reasons for setting up a trust. • Find out more about making a will and DIY wills. • Find out more about tax and inheritance tax.
