A Trust is a legal entity created by one or more persons (the “Grantors” or the “Settlers”) who then proceed to put title to all or a portion of their assets into this legal entity for the purpose of having those transferred assets attended to by a Trustee. The Trustee is the one who is appointed to be legally responsible for administering those resources on a day to day basis and may be a friend or a relative in whom one has confidence, an experienced banking institution or, as is sometimes the case, the Grantors/Settlers themselves. These transferred assets are called the trust corpus or the principal of the trust.
The exact type of trust to be employed is usually determined by what you are trying to accomplish. For example:
A) Avoiding Probate – a separate legal process to disperse assets upon death which can otherwise be very time consuming and costly.
B) Management of Assets - so as to provide for continuous professional supervision and an ongoing flow of monthly income.
C) Special Needs Planning - enable a disabled individual receiving public benefits to continue to retain those benefits while also inheriting as a beneficiary under the terms of a Special Needs Trust.
To achieve these types of objectives, the Living Trust can take one of two forms –
• The Revocable Living Trust - This is a Trust into which your assets are presently transferred, however you reserve the right by the terms set forth in the document to change your mind at any future time. You may subsequently have all or any portion of those assets transferred out of the trust and put into your own name or the name of of some other party.
• The Irrevocable Living Trust - This is a Trust into which your assets are presently transferred; however you cannot subsequently change your mind and have those assets returned to you from the trust. One should note that even with an irrevocable trust, where the Grantor and the Beneficiaries all agree, a trust that is otherwise conclusive can, in certain circumstances, be rescinded and the assets further dispersed.