By Attorney Curtis Edwards, J.D.
A trust is a written agreement formed by the grantor(s) and a trustee(s) that creates a separate entity (trust) to hold assets such as real estate, bank accounts, life insurance, etc., subject to an obligation to keep or use those assets for the beneficiaries named in the trust. The obligation to carry out the specific terms of the trust are the duty of the trustee(s) named by the grantor(s) of the trust.
Trusts come in many different forms such as a revocable living trust, irrevocable trust, testamentary trust, marital trust, or insurance trust, just to name a few. Each type of trust serves a different purpose, but most commonly trusts are used as a vehicle to avoid probate, to preserve and transfer wealth responsibly, and legacy planning.
Trusts often provide a seamless way to transfer wealth from one generation to the next and allow the grantor(s) of the trust to put controls in place regarding how assets will be used and distributed, both during and after their lifetime.
For example, a grandparent (grantor) might create a trust for their grandchildren (beneficiaries) during their lifetime, specifically for the purpose of funding the college education of the grandchildren. The trust would layout specific instructions (provisions) for how those funds should be distributed, such as the maximum allowable distribution to each grandchild, whether the funds can be used for tuition or other things like room and board, and whether or not the grandchild must use their benefit by a certain age.
In some cases, such as with a revocable living trust, the grantor will also be the initial trustee charged with carrying out the terms of the trust. However, after the original grantor/trustee passes away or is no longer able to serve, a successor trustee will take over and continue those duties. The original or successor trustee can also be a trusted friend or family member, or it can be an institution, such as a bank. In either case, the trustee will ensure that the trust assets are maintained and distributed per the terms of the trust established by the original grantor(s).
If you have any questions or are interested in learning more about this topic, please contact Lin Law LLC at (920) 393-1190.