A trust is the legal relationship that arises when a person transfers “stuff” to a trustee with the understanding that the trustee will manage it for the benefit of one or more beneficiaries. “Stuff” includes any kind of property you can own: real property—such as land and buildings—and personal property—such as bank accounts, stocks and bonds, and personal effects. A person who transfers stuff to a trustee is called a trustmaker. The trustmaker can be the trustee and the initial beneficiary of the trust.
A trust is controlled by a document called the trust agreement. The trust agreement sets out the rules about how the trust will be run. If the trust agreement says that the trustmaker can revoke it or change it, the trust is what we call a revocable trust. Revocable trusts are well suited to avoiding probate and keeping your loved ones from having to go to court if you become incapacitated. If the trust agreement does not allow the trustmaker to change or revoke it, we have what is called an irrevocable trust. Irrevocable trusts play an important role in many estate plans. They can help provide tax savings, creditor protection, and expert management of assets.
Your estate plan can include as many varieties of trusts as may be required to accomplish your objectives. The different kinds of trusts are like the different tools in your toolbox or the different utensils in your kitchen drawer. Using the right one at the right time can make a huge difference in how easily and how well you finish a job or serve a meal.