On the weekends we are sharing some of our "greates hits" from our blogs and newsletters of the past. This two part series appeared in the "Daily Plan It" of November 2005.
What is a Trust?
The legalese: To state it accurately, atrust is a legal relationship in which one party holds property that was entrustedto him for the benefit of another. (Of course, it might not come as a surprise toyou that there are better ways to explain things than using the legalese.)
The better explanation: A trust works likea bucket. Someone puts property into the bucket. That someone is often called theâ€œtrustorâ€ or â€œgrantor,â€ but many of our documents use the term â€œTrustmaker.â€ A secondperson (or institution) manages whatâ€™s in the bucket. In most documents, that manageris referred to as the â€œtrustee.â€ The third personâ€™s job is the one we all wouldlike to have. Her role is to receive some benefit from the property in the trust.This person is known as the â€œbeneficiary.â€
The tricky thing about trusts is that oneperson can play more than one role at the same time. Similarly, more than one personcan play the same role. For example, a married couple can be the Trustmakers andalso serve as the trustees. In most living trusts, the same person or persons serveall three roles. For example, a married couple can be the Trustmakers and also serveas the trustees. In most living trusts, the same person or persons perform all threeroles: They put the property into the trust for their benefit and appoint themselvesas managers.
In the next part of thisseries, weâ€™ll explain thedifferent types of trusts with the goal ofmaking them understandable.
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