A trust describes the legal responsibility of one party to keep your property and assets for a future beneficiary. When you create a trust with the help of an attorney, you (the “Settlor”) designate someone (the “Trustee”) to hold and manage your property (the “res” or “Corpus”) until a specified time when someone else (the beneficiary, who “benefits” from the trust) is ready to take the assets.
The trustee is legally responsible for management, placement, and oversight of the property that is put into the trust. The trust documents will include a variety of details, including when the trustee is legally allowed or required to release the property to the beneficiary.
A beneficiary for a trust can be anyone but is often a child or younger heir of some kind or even yourself. In the former case, money, property, or other assets are placed in a trust with the condition that the asset(s) is not released until the beneficiary is at least 18 years of age or even older, such as 25 or even 30. In the latter case, you name yourself as the trustee and as the lifetime beneficiary. Your desired heirs become the successor beneficiaries and have a future interest in the trust which becomes a present interest upon your passing.
While beneficiaries are often younger, you can name anyone as a beneficiary. A spouse, grandchildren, niece or nephew, parent, sibling, or even a close friend can be named a beneficiary on your trust.
There are numerous types of trusts: living trusts, charitable trusts, land trusts, and others. Each type has its own uses and benefits, and unique, complex details. Therefore, it’s best to work with a qualified attorney.
It depends. Whether a trust is a good fit for you depends on your situation, age, wealth, the type of assets you own, and your goals. The beneficiaries you name in your trust can receive the trust property almost immediately in the event of your death, or the distribution can be delayed. A will must go through probate court, which can be a lengthy process that includes the courts overseeing the transfer of your assets to your beneficiaries. Property held in a trust does not.
While there are similarities, trusts and wills are different in three important ways: