A trust is like an artificial person or entity that can hold property for the benefit of a real person. In some ways it might be taken as similar to a corporation, but in other ways it is very different.
The creation of a trust involves three parties. The Settler or Creator, who creates the trust. The settlers can be husband and wife.
The second party is legally responsible for managing the trust property and is called the trustee. It can be a professional trustee like a bank. In some cases the creators are themselves the trustees. For instance, the settler, husband and wife, who create a trust, can also be the trustees. In case one of them dies, then the other usually remains as sole trustee. Sometimes other trustee is also appointed. A successor trustee is appointed, when the surviving spouse also dies.
The third party is the beneficiary or beneficiaries. This is the party that receives the benefit of the trust income. These beneficiaries may even have the right to withdraw the principal assets of the trust depending on the creators. Again here too, the creators can be the beneficiaries, the same husband or the wife can be the beneficiaries of their own trust.
Generally there are two types of trust. You can put it in your will and the trust only takes effect after you die. The other way is to create a living trust. You can put your property into the trust while you are alive. Usually the living trust is revocable which means that you can withdraw a portion or even all of the trust property while both you and your spouse are alive. The principal difference between a testamentary trust (trust in a will) and a living trust is that a living trust will avoid probate expenses and a testamentary trust will not.
It should be well understood that trusts are made for the peace of mind that comes after confirmation of a secure future. Everybody wants their future to be secure and even their family’s future to be at ease after their life. Making trust is one easy and good way to make believe people that they have safe guard for their days to come.
It is not only deaths, but people are also concerned about their own self being should they be physically or mentally retard tomorrow. In such case these trust, as made, will take good care of them and handover their responsibility to their trusted and listed ones. It entirely depends on the creators on what kind of security they want for themselves and their family.
Generally professional help is hired for the job to make sure that the trust doesn’t have any loop holes that may work in against their intend. It is seen at times that, these trusts earn living for the attorneys their life long instead of the beneficiaries. So the creators should be very careful on creating them in the very first place.