Trusts are created to manage assets during life, transfer assets at death, and control bequeaths to heirs to protect inheritances. The main idea is who decides what goes where? Who sets up a trust? Who manages a trust? Our dedicated estate planning attorneys will explain all of this and more.

Trusts allow a person to control his/her assets. If this is one of your estate planning goals, it’s time to consult with us. There are different types of trusts for achieving various goals and managing different situations. We can help you decide the best way to proceed. Our Maryland estate planning attorneys can help you set up and maintain your trust throughout your life. Upon your death, we can help your heirs get whatever you leave them in the manner you say.

The Three Core Trust Roles

At its foundation, every trust involves three parties:

• The grantor (also called the settlor or trustor) creates the trust and transfers assets into it.
• The trustee manages and controls the trust assets according to the terms of the trust document.
• The beneficiary is the person or people who benefit from the trust assets.

These roles can overlap. With a revocable living trust, for example, the grantor typically serves as the initial trustee and primary beneficiary all at once. You create the trust, manage your own assets inside it, and benefit from those assets during your lifetime. The role separation becomes critical only when you pass away or become incapacitated and someone else needs to step in.

The Grantor: The Person Who Creates the Trust

The grantor is the starting point of every trust. This is the person who has the legal authority to transfer property into the trust, define its terms, name the trustee and beneficiaries, and set the rules for how and when assets are distributed.

With a revocable trust, the grantor retains full control. You can amend the trust terms, add or remove assets, change beneficiaries, or revoke the trust entirely at any time while you are alive and mentally competent. For tax purposes, a revocable trust is treated as if it does not exist. All income earned by trust assets is reported on your personal tax return.

With an irrevocable trust, the grantor gives up control once the trust is established. The assets are no longer considered part of the grantor’s estate, which can provide significant benefits for estate tax planning and asset protection. The tradeoff is that the terms generally cannot be changed after the trust is created.

When the grantor passes away, they are sometimes referred to as the decedent, and the trust transitions from a living document into a fixed set of instructions that the successor trustee must follow.

The Trustee: The Person Who Manages the Trust

The trustee is the person or entity responsible for managing the trust assets in accordance with the trust document. This is the role that carries the most day-to-day responsibility and the highest legal standard of care.

What Does a Trustee Do?

A trustee’s core duties include managing and investing trust assets responsibly, making distributions to beneficiaries according to the trust terms, keeping accurate records, filing required tax returns, and acting in the best interest of the beneficiaries at all times.

Under Maryland law, a trustee has a fiduciary obligation to the beneficiaries. This means the trustee must put the beneficiaries’ interests above their own, avoid conflicts of interest, and exercise the same care that a reasonable person would use when managing someone else’s property.

Who Can Serve as Trustee?

A trustee can be any legally competent individual or a corporate entity (such as a bank or trust company) that can take title to property. Common choices include the grantor themselves, a spouse or adult child, a trusted friend, a professional fiduciary, or an attorney or financial advisor.

For simpler trusts, a family member often works well. For larger or more complex estates, a corporate trustee or co-trustee arrangement may be worth considering.

The Successor Trustee: The Person Who Steps In

The successor trustee is arguably the most important role to get right, because this is the person who takes over when the original trustee can no longer serve, either due to death or incapacity.

If you create a revocable trust and name yourself as the initial trustee, your successor trustee is the person who will manage and distribute your assets after you pass away. They are also the person who steps in if you become incapacitated during your lifetime, managing trust assets on your behalf without the need for a court-appointed guardianship.

Successor Trustee Duties After the Grantor’s Death

When the grantor passes away, the successor trustee’s responsibilities include locating and securing all trust assets, obtaining appraisals, notifying beneficiaries, paying outstanding debts and taxes, and distributing assets according to the trust terms.

This process typically takes 9 to 12 months. The key difference from probate is that trust administration happens privately, without court supervision, and without the associated costs and delays.

Choosing the Right Successor Trustee

Look for someone who is trustworthy and organized, capable of managing financial matters, and able to act impartially if there are multiple beneficiaries with competing interests. If you are concerned about family conflict or asset complexity, naming a professional co-trustee alongside a family member can provide both personal attention and institutional expertise.

The Beneficiary: The Person Who Benefits

The beneficiary is the person (or people) for whom the trust exists. Everything the trustee does should be in the beneficiary’s best interest.

How Beneficiaries Work

A trust can have one beneficiary or many. Multiple beneficiaries do not need to have equal interests. The grantor can specify different amounts, different timing, or different conditions for each beneficiary. For example, you might leave one child’s share outright while holding another child’s share in trust until they reach age 30.

Beneficiaries do not need to exist at the time the trust is created. A common example is naming future grandchildren as beneficiaries. The trust document can include language that accounts for beneficiaries who are born after the trust is established.

Conditions on Distributions

One of the advantages of a trust over a simple will is the ability to place detailed conditions on when and how beneficiaries receive their inheritance. Common conditions include age-based triggers (such as distributing a third at age 25, a third at 30, and the remainder at 35), educational incentives, protections for beneficiaries with special needs to preserve their eligibility for government benefits, and spendthrift provisions that protect the inheritance from a beneficiary’s creditors.

These conditions are written into the trust document by the grantor and enforced by the trustee after the grantor’s death.

Frame & Frame Can Help You Set Up and Manage Your Trust

If you want to know more about a trust in which you are named as a beneficiary, we can help you understand your role and responsibilities with regard to the trust. If you want to set up a trust to protect and manage your assets during your lifetime, we can help you decide what type of trust you need to meet your goals. If you want to set up a trust to manage the transfer of assets upon death, we can also help you with that. Contact us today for more information or assistance.