TRUSTS
Trusts are legal entities that can be used to transfer and manage property or assets. It is an ingenious entity empowering Trustees of the Trust to have and hold all control over that property or assets. The terms and conditions of the Trust strictly define the form of the trust used and the needs of the people it is created to serve.
TRUST ESTABLISHMENT
To establish a trust, consideration of some type is transferred from a Settlor to another person (known as the trustee) with the understanding that the recipient will hold the property and assets or use them in a way that is directed or established as laid out in the terms and conditions of the trust. Anyone who benefits from the use of the property or assets is known as the beneficiary.
TRUST ESTATE
The property or assets that are transferred to a trust becomes the trust corpus. The Trustee of a trust is the only entity that can affect the transfer of assets, property, or monies to a trust. A trust estate consists of all the property (tangible or intangible), assets, cash, rights and obligations that are transferred to the trust. The trust estate is managed in accordance with the terms and conditions of the documents creating the trust. Because the property is held in trust it is generally not subject to turnover*.
Parties To A Trust
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Settlor (also called the Grantor):
- Creates a trust for the benefit of beneficiaries with initial funding (can be as little as $10)
- Can never be a trustee, compliance overseer or beneficiary
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Trustee:
- Person or financial institution who holds the legal title in trust for the trust estate
- Can be one or more (co-trustees)
- Successor trustee is named if a trustee unable to serve
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Beneficiaries:
- Benefit from the trust but have no “equitable title” – only “beneficial” interest in the assets
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Compliance Overseer:
- Full authority to appoint or remove a Trustee (and is usually same person as initial trustee) and/or beneficiary
- NOTE: Will never be a beneficiary.