Trusts

A trust is a legal arrangement in which one party, known as the trustor (also called the settlor or grantor), transfers ownership of property or assets to another party, the trustee, who holds and manages those assets for the benefit of a third party, the beneficiary.

Key Elements of a Trust

• Trustor/Settlor/Grantor: The person who creates the trust and transfers assets into it.
• Trustee: The individual or entity responsible for managing the trust assets according to the trust’s terms.
• Beneficiary: The person or entity for whose benefit the trust is created.
• Trust Property/Corpus: The assets or property held within the trust.

Purposes and Features

• Asset Management and Distribution: Trusts specify how and when assets are to be managed and distributed to beneficiaries.
• Avoiding Probate: Trusts can help assets bypass the probate process, allowing beneficiaries to access them more quickly after the trustor’s death.
• Tax and Creditor Protection: Certain types of trusts can reduce estate taxes and protect assets from creditors.
• Flexibility: Trusts can be tailored for various purposes, such as providing for minors, supporting charitable causes, or managing assets for individuals with special needs.

Types of Trusts

• Living Trust (Inter Vivos Trust): Created during the trustor’s lifetime.
• Testamentary Trust: Established through a will and takes effect after the trustor’s death.
• Revocable Trust: Can be altered or terminated by the trustor during their lifetime.
• Irrevocable Trust: Generally cannot be changed once established.

Legal Requirements

To be valid, a trust typically requires:

• A settlor with intent and capacity
• A trustee
• A beneficiary
• Trust property
• Compliance with legal formalities (such as being in writing and signed, if required by law)

Summary Table

Role	Description
Trustor	Creates the trust and transfers assets
Trustee	Manages trust assets for beneficiaries
Beneficiary	Receives benefits from the trust
Trust Property	Assets held within the trust

Trusts are widely used in estate planning and asset management to achieve specific legal and financial objectives.