A Trust is a form of property ownership whereby a property owner transfers their assets into Trust for the benefit of another person.
A Trust is a form of property ownership whereby a property owner transfers their assets into Trust for the benefit of another person. In other words, when you create a Trust, you remove your property from your personal estate and transfer it into a separate entity for the benefit of the beneficiary of the Trust. Think of it like starting a business with your personal assets.
The Trust manages, grows, and, eventually, distributes those assets transferred into it to provide for an efficient transfer of wealth and assets after your death. To better understand how this works, you need to know the three important players.
The Settlor (also known as the Grantor) is the person who creates the Trust (i.e., the Settlor's assets are placed in Trust). There can be more than one Settlor. Depending on tax planning objectives, spouses will oftentimes create one Trust together (known as a Joint Trust), meaning that both spouses will be the Settlors of the Trust.
The Trustee, in contrast to the Settlor, is the person who legally owns the property held in Trust. The Trustee serves in a fiduciary capacity (meaning they must manage, control, and grow the assets held in Trust) and they owe a duty to the Beneficiary. As with the Settlor, there can be more than one Trustee. Spouses will often serve jointly as Trustees of their Joint Trust during their lifetimes. Once the spouses become incapacitated or die, someone else takes over as Trustee (known as the Successor Trustee). This can be a family member, a trust friend, or a trust company.
Lastly, we have the Beneficiary. The Beneficiary is the person for whom the Trust is created. When a married couple creates a Trust together, they name themselves as Beneficiary of the Trust. During their lifetimes, all the Trust property is meant to benefit and support them. After their deaths, their children, other relatives, or charities become Beneficiaries of the Trust.
So, to sum it up, most people who create a Trust will play all three parts (the Settlor, Trustee, and Beneficiary) during their lifetime and while they have the mental capacity to manage their own finances. It is only after their death or incapacity that someone else steps in as Trustee or becomes Beneficiary to the Trust.
Trusts are the best way to provide for an orderly and efficient transfer of wealth after death. See if our St. Louis trust attorney can help you.
Wills grant you the freedom to specifically distribute your assets to your loved ones. See if our St. Louis will attorney can help you.
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