What is a trust?

Basically, a trust is a legal contract through which you (the grantor) transfer property to a trust, which is then managed by a third party (a trustee). A trustee can be an individual or an institution. The trust holds your property for the beneficiaries you name, under rules you stipulate---called the purpose or intent of the trust. The trustee is charged with the management, administration and disbursement of the trust’s assets. Because a trust fulfills your particular wishes and needs, there are no standard trusts. Every trust is structured to accommodate the need of the grantor and his or her beneficiaries. However, there are several categories of trusts. A very important aspect of trust law is that property that is transferred to certain types of trusts is no longer considered a part of your estate.

Comparison between trusts and wills

Question	Trust	Will
Who creates it?	Grantor	Testator
How frequently is property distributed?	Periodically, as described in trust document	Within a year of the testator’s death
Who is the fiduciary?	Trustee	Estate executor
Who is the beneficiary?	Anyone named in the document as beneficiary, including those not born yet	Only those alive at the time of the testator’s death.
Does this avoid probate?	Yes, if the assets already are in trust	No. All wills must comply with probate.
What are the privacy rules?	High privacy, not often a part of the state records	Lower privacy, all wills must be filed with the State.

Structure of a trust

A trust is a separate legal entity created when the grantor transfers the control of his or her assets to an independent third party (the trustee), who will then manage these assets as the grantor declares. The trust is regulated by guidelines delineated in a special document, which may be called one of several names: the Settlement Deed, the Trust Deed, the Trust Instrument or the Declaration of Trust. One other element in the trust is a document that the settler writes known as the “letter of wishes.” The letter is not legally binding, but it can serve as a guide. If the trust is revocable, the “letter of wishes” can be changed or updated as needed.

What types of assets can be assigned to a trust? Trusts can hold assets that include:
		Bank accounts
		Brokerage and investment accounts
		Real property (a house, land, etc.)
		Shares in companies
		Intellectual property (trademarks, patents, etc.)
Benefits of a trust
		Assets held in trust can avoid probate.
		Trusts offer more privacy than wills and other legal documents because often they are not part of the public record.
		Trusts offer estate tax protection.
		Trusts protect your assets.
		Trusts can be used to manage your investments professionally.
		Trusts are way to hold your property for your beneficiaries and to be distributed as you declare. You will decide to whom, how, when and under what circumstances the assets will be disbursed.