What is a Trust?
A Trust is a separate legal entity (like a corporation) which holds assets that the Trustee manages for the benefit of the beneficiaries.
What are the essential elements of a trust?
Every trust must have the following:
- Trustor / Settlor / Grantor – The person who creates the trust.
- Trustee – The person or firm chosen to manage the trust, such as American Trust Center.
- Beneficiaries – The individuals or entities that receive the benefits of the trust’s assets. The beneficiaries can be a spouse, children, grandchildren, charities, etc..
- Trust Property – The assets in the trust that are managed by the trustee. This can include cash, stocks, bonds, real estate, personal property, precious metals, life insurance policies, automobiles, etc..
- Trust Terms – The trust administration rules that the trustee must follow when managing trust assets and making distributions from the trust. These rules are typically laid out in a written trust agreement signed by the person(s) who created the trust.
Types of Trusts
Central to many estate plans is a trust. Several types of trusts are available, depending on your current circumstances and goals:
- Revocable Living Trust - For the person who wants to assure the property in their trust is well managed, even after they cannot or do not want to manage it for themselves. They may also want the property to pass with the least amount of cost and procedure (no probate), but they want the right to change the trust terms from time to time if they desire.
- Testamentary Trust - For the person who wants money or other property set aside after their death for use and distribution as they determine while they are alive. Testamentary trusts are usually created after death by terms of a decedent’s will.
- Charitable Trust - For the person who wants to benefit a charity, obtain an income tax deduction, reduce the size of their estate and still receive payments from the property given to the charity, during their lifetime or for a specific period of time.
- Irrevocable Trust - For the person who wants to remove property from their estate for estate tax purposes, but wants it used and distributed for purposes they direct (example: for support of their spouse and children or for their grandchildren's education). There are several commonly known types of irrevocable trusts including life insurance trusts, mineral trusts, marital trusts, credit shelter trusts, education trusts, minor trusts and special needs trusts.
Please contact one of our Trust Officers with questions about Personal Trusts or to obtain further information about your Personal Trust planning options.