The Internet is full of estate planning advice most of which tends to suggest that people should get a trust. The benefits of doing so are often explained in detail.
Nevertheless, before people can get to the point where they can adequately assess the benefits of a trust for their own circumstances, they first need to know what a trust actually is.
That is not explained as often.
While it might seem obvious to some people, other people do not really know what a trust is. Recently, the Motley Fool discussed some of the basics in “What Is a Trust Fund?”
A classic trust is very simple. Person A (the grantor) creates a legal entity and gives it assets that are managed by Person B (the trustee) for the benefit of Person C (the beneficiary). Those are the three basic elements of every trust.
They can be complicated. For example, a trust can have multiple Persons A, B or C. In some types of trusts a single individual can play more than one role. Despite those complications, the basic structure of the trust does not change.
While there are many different types of trusts, including family, revocable, irrevocable, and many more, they all follow the same pattern. Trusts are a way to pass assets on to beneficiaries in a way through which those assets are independently managed by a trustee.
If you would like to learn more about trusts and whether one is right for you, contact an estate planning attorney.
Reference: Motley Fool (Aug. 28, 2016) “What Is a Trust Fund?”