Do you ever wonder what exactly a trust is when you hear things like "family trust" or "living trust?" It's basically a legal arrangement where one person gives control of an asset to another person or organization to manage that asset for the benefit of a third-party beneficiary. This can get confusing, so let your trust attorney break it down into easier concepts. Let's take a look for more information!

Who Is Involved in a Trust?

The person who creates and funds the trust is called the grantor or settlor. This is usually you if you are setting up a trust for your family or assets. The person named by the grantor who will manage the trust is called the trustee. This could be you, your spouse, an adult child, a family member, a friend, or a professional trust company. The person named by the grantor who will benefit from the trust is called the beneficiary.

Why Might I Want a Trust?

There are a few key reasons why you might want to have your trust attorney help you set up a trust. The main ones are to avoid probate, protect your assets, avoid estate taxes, provide for a beneficiary who cannot manage money themselves, or set up philanthropic giving. Your trust attorney can advise if a trust makes sense and walk you through the options. Unfortunately, while there are benefits to having one, not everyone currently has one. According to Caring.com, 66% of Americans don't have any estate planning documents.

How Does a Trust Work?

When you set up a trust, you transfer a legal title of your asset to the trustee to hold and manage for the beneficiary per the instructions you provide. As the grantor, you can still control the asset terms while you are alive through the trustee. Since the asset is legally transferred, it avoids passing through probate when you pass away. This saves your loved one's time and money later. The appointed trustee then carries out the distribution of the trust assets per your directives for the beneficiary's benefit.

Hopefully, this gives you a basic understanding of what a trust is. But every situation is unique, so consult your trust attorney to determine if a trust is right for your goals. Whether you want to provide for your spouse, support a child with special needs, reduce estate taxes, or donate to a cause, your trust attorney can guide you in setting up a trust tailored to your objectives. Call us at Clarkson & Associates, LLC to schedule a consultation to learn more about setting up a trust today.