Estate Planning Basics: An Introduction to Trusts
April 8, 2022
Perhaps you have heard about trusts but wonder exactly what they are and what they can help you accomplish. Simply put, a trust is an agreement outlining how assets will be managed and held for the benefit of another person. There are many types of trusts, capable of addressing a wide range of concerns and accomplishing several important goals. Let’s begin our discussion by looking at the elements and terminology shared by most trusts.
All trusts have a grantor (also known as a trustor or settler). The grantor is the person who creates the trust and has the legal authority to transfer property held in the trust.
The beneficiary is the person who “benefits” from the trust. A beneficiary can be one person or several different parties. A beneficiary can also be an institution, such as a charity.
The trustee is the individual (or in some cases, the institution) authorized to take title to property on behalf of a beneficiary. The trustee is responsible for managing the property according to the rules described in the trust document. Additionally, the trustee must act and make decisions based on the best interests of the trust’s beneficiaries.
For a trust to accomplish its goals, it must be funded by the grantor. “Funding a trust” refers to the process of transferring ownership of assets from the grantor to the trust. These assets can include money, real estate, stocks, jewelry, and more. It is important to note that assets “outside” the trust are not controlled by the trust.
On the next post, we’ll discuss the difference between a revocable and irrevocable trust, together with the benefits of planning with trusts. Although defining these terms, or the idea of even having a trust may be new to you, it is our specialty at McKelvey Law Offices, LLC. Give us a call to schedule an appointment to discuss the possibility of creating a trust for you! We are located in Salix, Pennsylvania, right outside of Johnstown. Reach us at (814) 961-2050.