Most people have heard of trusts but few know exactly what they are. So, what is a trust? A trust is a method of ownership of property that divides management of trust property from ownership of trust property. The trustee holds trust property for the benefit of a beneficiary. The trustee has the fiduciary duty to manage assets in the trust on behalf of the beneficiary in accordance with various rules, including the rules set out in the trust instrument. Depending on the type of trust, it is possible for the trustee and the beneficiary to be the same person; however, in many cases the trustee differs from the beneficiary.
When might a trust be necessary? In general, trusts are flexible instruments that can be used for a variety of purposes. Listed below are some of the reasons an individual might utilize a trust:
- manage property for a minor;
- manage property for a person with a disability;
- control how property passes at the death of a beneficiary;
- avoid probate; and
- ease management of property in the event of a disability.
Is a trust necessary? As with any estate planning vehicle, whether it is right for you depends on your individual needs, goals, and circumstances. Feel free to contact us with your questions about trusts or other estate planning techniques.
