A trust is the
legal relationship that arises when a
person transfers “stuff” to a trustee
with the understanding that the trustee will manage it for the benefit of one
or more beneficiaries. “Stuff” includes any kind of property you can
own: real
property—such as land and buildings—and personal
property—such as bank accounts, stocks and bonds, and personal effects. A person who transfers stuff to a trustee is
called a trustmaker. The trustmaker can be the trustee and the initial
beneficiary of the trust.
A trust is controlled by a document called the trust agreement. The trust agreement sets out the rules about
how the trust will be run. If the trust
agreement says that the trustmaker can revoke it or change it, the trust is
what we call a revocable trust. Revocable trusts are well suited to avoiding
probate and keeping your loved ones from having to go to court if you become
incapacitated. If the trust agreement
does not allow the trustmaker to change or revoke it, we have what is called an
irrevocable trust. Irrevocable trusts play an important role in
many estate plans. They can help provide
tax savings, creditor protection, and expert management of assets.
Your estate plan can include as many varieties of
trusts as may be required to accomplish your objectives. The different kinds of trusts are like the
different tools in your toolbox or the different utensils in your kitchen
drawer. Using the right one at the right
time can make a huge difference in how easily and how well you finish a job or
serve a meal.