What are trusts for?
A trust is an arrangement for owning assets, a major approach that is different from a corporation or partnership. It is used for many different types of purposes, with personal reasons being common but also for business uses.
For personal (non-business) purposes, it's created so that a goal can be pursued over a period of time, say, to provide for a loved one, say a spouse or a child. When the spouse or child dies, or turns a responsible age (say, 30) for a child, the assets are distributed to the person.
One feature of a trust is that the beneficiary is not considered the owner of the property. So, when that person dies, the assets in the trust generally not part of their 'estate.'
Many times you are the trustee for your own trust
And if not part of their estate, then taxes that are based on the size of their estate are lower. Trusts can be used to lower estate taxes in this way. They've been used for this purpose since the 14th century in England.
Sometimes a trust is used to protect a person from having full reign over the money.
For example, does a beneficiary have a drug problem? Or alcohol?
Some people set up a trust to avoid 'probate'. Probate is a court process that is needed to make a will effective. Until the will is approved by the probate court, it is only a collection of papers stapled together.
After a judge declares it a will, the person named in the will has the authority to collect the assets of the deceased person and distribute them according to the terms of the will.
A benefit of all trusts is that you avoid the need to proceed through the probate court process for assets in the name of your trust. Even if you, alone, were the trustee. Because the law considers you, alone, as different from you 'as trustee.'
A trust describes what should happen to the property during the trust's existence. A trust has a beginning, an existence, then it ends (terminates).
Trust describes what to do with trust assets during your life and after your death
A trust provides for legal title to belong to one party, the trustee, who manages the property for the benefit of a second party, the beneficiary. But please realize that you can be the initial trustee and initial beneficiary at the same time.
You should realize that at the beginning of a trust, you can and often will be the trustee. In the trust, you are entitled to all the income and principal of your trust. And the power to amend or revoke your trust. At the beginning of the trust, you are likely the sole current beneficiary.
After you die, a trust can have one or several beneficiaries. If you have children, chances are high that they will be the future beneficiaries of your trust. They become current beneficiaries when you cease to be the current beneficiary - usually at your death.
If you become incapacitated or die, another person will become the trustee. That person is called a successor trustee.
f you are married, chances are high you and your spouse will both be trustees of your trust. After the death of one spouse, the surviving spouse will be the sole trustee.
Let's imagine that you have assets and property that you're still enjoying now. You plan to pass these assets and property along to a beloved relative, Pat, after your death. But Pat, for whatever reason, isn't up to handling large amounts of money or property. You can create a trust that names a responsible person (the trustee) as owner of the property. The trustee will use the property and assets for the benefit of Pat, the beneficiary.
A trust includes a direction to the trustee about to whom to give the assets when the trust ends. If a trustee dies during the trust's lifetime, the trust will dictate the next trustee (the successor trustee). There may be more than one or successor trustee, and they can act either together (jointly) or singly (one at a time, in a listed order).