Trusts are created to manage assets during life, transfer assets at death, and control bequeath to heirs so as to protect inheritances. The main idea is who decides what goes where? Who controls a trust?
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.
Definition of a Trust
A trust is a legal entity that holds assets for the benefit of another. You can put practically any kind of asset into a trust, including cash, stocks, bonds, insurance policies, real estate, jewelry, and artwork. The assets you choose to put in a trust depend largely on your goals. There are many different goals and remedies that we can discuss with you. Contact our Maryland estate planning attorney today for more information.
Trusts Have a Long History
Trusts were developed at the time of the Crusades, under the English legal system. When a landowner left for the Crusades, he had good reason to worry that his land might be stolen during his absence. To protect his land, he would convey the title to a trusted person. Today, we call this individual the trustee. The trustee promised to convey the land back to the original owner upon his return. When the original owner received his land back, he was called the beneficiary. Over the centuries, laws relating to trusts were developed to encompass many other situations and assets.
Definition of Trust Roles
The main concept carried forward through history is that a trustee owes a high duty of loyalty and care to the trust’s beneficiary. Now, as in medieval times, there are three parties involved when a trust is created:
- The creator of the trust who at times is referred to the settlor, grantor, or trustor;
- The trustee who manages and controls the asset, and
- The beneficiary, for whom the trustee manages the property.
The creator, trustee, and beneficiary may all be different people. The same person may be the creator and the trustee. The same person may be the trustee and the beneficiary. As is often the case with a revocable trust, the creator, trustee, and beneficiary are the same person.
The Creator of the Trust
All trusts have a grantor, sometimes called a settler or trustor. This is the person who creates the trust and is the one who has the legal capacity to transfer property held under the trust. When this person dies, he is called the decedent. The assets in the trust are supplied by the grantor.
The trustee of the trust can be any legal individual or corporation that can take title to property on behalf of a beneficiary. The trustee is responsible for managing the property according to the rules outlined in the trust document, and must do so in the best interest of the beneficiary. This person may be the grantor, the spouse, or adult child of the trust or a third party. It is important to note that the trustee must be prepared to be held accountable to the grantor and/or beneficiaries.
The beneficiary is the person benefiting from the trust. The beneficiary can be one or multiple parties. Multiple trust beneficiaries do not have to have the same interests in the trust property. An interesting thing about trust beneficiaries is that they do not have to exist at the time the trust is created. Typically, any person or entity can be named a beneficiary of a trust, will, or life insurance policy. The one distributing the funds, or the benefactor, can put various stipulations on the disbursement of funds, such as the beneficiary attaining a certain age or being married. There can also be tax consequences to the beneficiary. For example, while the principal of most life insurance policies is not taxed, the accrued interest might be taxed.
Frame & Frame Can Help You Establish 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.