What Is a Trust?

A Trust is an estate planning tool that helps families across the St. Louis area effectuate an efficient transfer of assets upon death, protects them from creditors, and reduces taxes imposed on their estates after death.

The Basics

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 take your property out of your name as an individual, and transferring it into a separate entity to be held 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 effectuate an efficient transfer of wealth and assets after your death. To better understand how this works, we need to introduce three different characters:

  1. The Settlor: the person who creates a Trust.
  2. The Trustee: the person who owns legal title to property held in Trust.
  3. The Beneficiary: the person for whom the Trust is created.

The Settlor is the person who creates the Trust. It is the assets of the Settlor that will be placed in the Trust, and there can be more than one Settlor of a Trust. Depending on tax planning objectives, spouses may elect to create a Trust together, meaning that both of them will be considered the Settlors.

The Trustee, in contrast to the Settlor, is the person who owns legal title to the property held in Trust. What does this mean? Well, when the Settlors create the Trust, they technically transfer ownership of their assets to the person serving as Trustee. The Trustee then serves in a fiduciary capacity (meaning they owe a duty to manage, control, and grow the assets) and owes a duty to the Beneficiaries of the Trust. As with the Settlors, there can be more than one Trustee. Spouses will often serve jointly as Trustees of their Trust during their lifetimes. However, depending on the client's tax planning objectives, it may be advantageous to have a third-party serve as Trustee of the Trust.

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 Beneficiaries of the Trust during their lifetime, and then usually name their children, relatives, or even charities as Beneficiaries of their Trust after both of their deaths.

So, if you've been following along, many married couples will play all three roles (the Settlors, the Trustees, and the Beneficiaries) during their lifetimes and while they have the mental capacity to do so. It is only after their deaths or incapacity that someone else steps in as Trustee of the Trust or becomes Beneficiaries to the Trust.

Living vs. Testamentary Trust

Trusts can be created during the Settlor's lifetime or after the Settlor's death. If the Settlor creates a Trust during his or her lifetime, the Trust is considered an "Inter Vivos" Trust, or Living Trust. If the Trust is created after the Settlor's death, the Trust is considered a "Testamentary Trust." A Testamentary Trust can be created in an existing Trust or in a Will that specifically provides for the creation of a Testamentary Trust.

Revocable vs. Irrevocable Trusts

There is also a distinction to be made between Revocable and Irrevocable Trusts. A Revocable Trust is a Trust which can be amended, restated, revoked, or repealed during the lifetime of the Settlor. The Settlor alone has this power. Because of the nature of the Settlor's power to revoke the Trust, any Revocable Trust will still be considered part of the Settlor's estate since they retain control over the Trust's operation and functionality.

Irrevocable Trusts, on the other hand, are Trusts which cannot be amended, restate, revoked, or repealed. It does not matter if the Settlor is living and competent, they cannot amend or revoke the Trust. Of course, as with anything, there are certain exceptions to this rule. But, because of the difficulty in amending or revoking an Irrevocable Trust, so long as the Settlor is not acting as the Trustee or Beneficiary of the Trust, they are able to remove certain assets placed in the Irrevocable Trust out of their estate to reduce their overall tax burden after death. Irrevocable Trusts are generally used for higher net worth clients wishing to mitigate taxation at death.

Trust Benefits

Trusts have a number of different benefits. First and foremost, Trusts are efficient vehicles for wealth transfers. By statute, Trusts avoid the arduous and cumbersome Probate process. So long as the Trust owns the majority of the Settlor's property at their death, none of the Settlor's property will have to go through Probate, meaning the Beneficiaries of the Trust do not have to wait for court orders before receiving their inheritance. This is the primary objective of most clients of The Taormina Firm.

Trusts also come with creditor protections. If a beneficiary is especially prone to having a lot of debt and is unable to repay that debt, their creditors could potentially come after your estate since the beneficiary is expected to receive an inheritance from you. By including a "spendthrift provision" in your Trust document, you will be able to preclude creditors from coming after your property both while you are living and after you die. Only upon a direct distribution from your estate to the beneficiary can the creditors go after your beneficiary for the repayment of debt.

To learn more about the benefits of Trusts, please contact estate planning attorney Vince Taormina of The Taormina Firm.


Vince Taormina is an experienced St. Louis trust lawyer who works with families to educate them on the benefits of having a trust.

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