A trust is an estate planning tool used to hold property for a beneficiary.  A trust is a contract between the grantor (the person who wrote the trust) and the trustee to manage the property for the benefit of a beneficiary. Such property may include money, goods, or anything that has value.  In addition, the trust may include instructions to the trustee that specify the manner in which the beneficiaries receive the trust property.  In some cases, a portion of the property may be distributed to the beneficiary outright during the life of the trust. In other cases, the distribution of property is dependent on something else happening; for instance, getting married, graduating from college, or attaining a certain age.

A trust can provide for the distribution of trust property upon the death of the grantor.  If properly funded, this kind of estate planning can avoid probate proceedings. In such case, the grantor typically creates a “pour over will” to ensure that all of his or her assets are gathered in the trust. 

There are different kinds of trusts. A “revocable trust” or “living trust” may be changed as long as the original grantor is living. When the grantor dies, the trust becomes irrevocable and may not be changed at any time.  Other trusts are created as “irrevocable trusts,” such as an “irrevocable life insurance trust,” which is often used to transfer property out of the grantor’s estate for estate tax purposes. Charitable trusts such as a “charitable remainder trust” give property in the trust to charity upon the death of the grantor or after a fixed period of time. This kind of estate planning can create a tax benefit for the grantor while permitting the grantor, or a designated beneficiary, to receive an income interest during the grantor’s life or during the fixed time period set forth in the trust.

There are many different types of trusts. The lawyers at Isaac, Brant, Ledman & Teetor LLP can make sure you make the right decision for your loved ones.