Trust

What Is a Trust? A trust is a legal entity created when one person (the grantor, settlor, or trustor) transfers assets to another person or institution (the trustee) to hold and manage for the benefit of designated beneficiaries. The trust document sets forth the rules governing how assets are managed, invested, and distributed. Trusts are widely used in estate planning to avoid probate, minimize taxes, protect assets, and provide for family members. ## Common Types of Trusts - **Revocable living trust** can be modified or revoked by the grantor during their lifetime and avoids probate - **Irrevocable trust** cannot be changed once established, but offers tax benefits and asset protection - **Testamentary trust** is created through a will and takes effect after the grantor's death - **Special needs trust** provides for a disabled beneficiary without affecting government benefits eligibility - **Charitable trust** benefits a charitable organization while providing tax advantages ## Key Advantages Trusts offer several advantages over wills, including avoidance of the public probate process, faster distribution of assets to beneficiaries, potential estate and gift tax savings, protection of assets from creditors (irrevocable trusts), and the ability to impose conditions on distributions. The trustee has a fiduciary duty to manage the trust assets prudently and in the best interests of the beneficiaries.