What are Trusts?

A trust is a legal document that establishes a relationship between a grantor, trustee, and beneficiary, where the grantor transfers assets to the trustee to be held for the benefit of the beneficiary:

Grantor: The person who transfers assets into the trust
Trustee: The person who holds and manages the assets for the benefit of the beneficiary
Beneficiary: The person who receives the beneficial enjoyment of the assets

Trusts are created under state law and can be used to transfer assets to loved ones or charitable organizations. They can be established during the grantor's lifetime or after their death. Trusts can help avoid the probate process, which is the legal process of distributing assets outlined in a will.

Types of Trusts

Protective Trust

Can be used to protect a family's inheritance from lawsuits and other adverse actions

Credit Shelter Trust

Allow spouses to take advantage of their estate tax exemptions

Irrevocable and Revocable Trust

Revocable trusts

Allow the grantor to maintain control and change the trust at any time.
Irrevocable trusts

Cannot be modified and provide benefits like protection from creditors and reduced taxes.

Living Trusts

Created while the grantor is alive to own property like a house, investments, or a boat. Property in a living trust is not subject to probate.

Special Trusts (Complex)

There are other complex and intricate trusts such as:

Charitable remainder unitrusts- A type of split-interest trust where income is distributed to individuals for a set period of time. After the set period, the remainder of the trust is transferred to charitable beneficiaries.

Special needs trusts- Created for people who qualify for government benefits or Medicaid. Assets in a special needs trust are not considered the beneficiary's personal assets.

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