A Trust is a legal arrangement established by a written agreement (the ‘Trust’) that states the contents of the Trust (money or other assets) are being held for another party. After the Trust agreement is signed, certain assets are transferred into the name of the trustee, who is legally appointed in the agreement. The “trustee” manages the assets in the trust and distributes it. The “beneficiary” is the person to whom the property will go. The terms of the trust outline when the property will be distributed, who it will go to, who is in charge of the trust and how the property can be used. For example, will the assets pay for a child or grandchild’s future rent or will the assets be designated for their education only?
There are many different types of Trusts, and each one has its own rules about how the Trust property is managed and distributed. A very common type, a revocable Trust, is one in which the settlor (grantor), the person who creates the Trust and transfers property to the Trust, is also the trustee and beneficiary of the Trust. Use of a revocable trust greatly reduces the time, effort and expenses required to pass assets on at death compared to going through a court probate.
For those who are divorced whom do not want an ex-spouse to manage their inheritance for their minor children, a Trust can be put into their Will. This will hold the inheritance for their minor children to be managed by a trusted family member.