A trust agreement is a document that gives clear instructions that you want followed for property held in the trust for your beneficiaries. Common objectives for trusts are to avoid probate, to reduce the estate tax liability, to protect your property for long term care planning, or to control specific distribution of your estate even after your lifetime.
There are three important parties to a trust.
The first is the “grantor” or “settlor”, which is the person(s) who is creating the trust. The grantor creates the trust and puts his or her chosen assets into the trust.
The second is the “trustee”, the person(s) the grantor chooses to manage the assets in the trust. The grantor appoints the trustee to take good care of the assets in the trust according to the instructions written in the trust document.
The third is the “beneficiary” or “beneficiaries”, the person(s) for whose benefit the assets are held and managed. The trustee has the duty and authority to manage the assets for the benefit of the beneficiary, who is entitled to receive the assets in the amounts, percentages, and at the time indicated in the trust.
It is common for one person to play more than one role in a trust.
