What is Trust
Trust is a legal instrument with the main purpose to secure your assets on the behalf of your beneficiaries.
Every trust must have four primary elements. The first element is the trust maker – the person who makes the trust. This person can also be called the “Grantor” or “Settlor.” The second element is the person who manages the trust assets and performs the functions of the trust. This person is called the “Trustee” and can sometimes be the same person as the trust maker or can be a professional or institutional trustee.
There are more levels of trusteeship. For instance, when the original trustees are deceased or no longer to serve, then another person is appointed to take their place. That person is called the “Successor Trustee.”
The third element is the person or class of persons who will benefit from the existence and operation of the trust. This person is called a “Beneficiary” and the original beneficiary is sometimes the trust maker, however in many types of trusts the trust maker is not the beneficiary.
After the trust maker is deceased, then normally their children become the next line of beneficiaries. Of course, if more than one person exists, they are called “Beneficiaries.” The final element consists of the assets inside the trust. These assets are called the trust “Corpus.”
Bellow are the most common Trusts that my clients need:
This type of trust can be amended, added to or revoked during its maker’s competent lifetime. After the maker is deceased, this type of trust typically becomes irrevocable.
These trusts can’t be changed after they are made. There are many uses for irrevocable trusts – like funding legacies for children or grandchildren. Others might use an irrevocable trust to make gifts of property or life insurance.
This is the type of trust that is typically included in a person’s Will. A testamentary trust goes into effect only after its maker has deceased. This trust could also be considered a revocable trust because your Will can be changed at any time during your lifetime.
Any trust that takes effect during the maker’s lifetime is considered a living trust. Most people – and sometimes even legal professionals – misinterpret the distinctions presented here. People are often heard talking about “living trusts” when they really mean “revocable trust.” Sure enough, the revocable trust is typically a living trust, but irrevocable trusts are very frequently living trusts, too!