What is a Trust?
When you think of the word “trust” it may conjure up images of standing on the edge of a table, hands across your chest, as you fall backward into the arms of your buddies.  But when it comes to estate planning, a “trust” is something entirely different.   

A trust is a mechanism used in estate planning to protect and distribute your assets.  It can be used during your lifetime and/or after your death.  Think of a trust as a sort of “pot” in which you place your assets.  You establish the rules about what is to be done with the assets in the pot.  You also put someone in charge of caring for and distributing those assets.  There are several components of a trust:  

Settlor or Grantor:  This is the person who sets up the trust.  

Trust property:  This is the property that goes into the imaginary “pot.”  Trust property is titled in the name of the trust and is referred to as being “held in trust.”  It is also known as the “corpus” of the trust.  

Trustee:  A trust is managed and overseen by the trustee.  This person makes sure the trust property is cared for and distributed according to the rules of the trust.  

Beneficiary: A person who receives a benefit or distribution from a trust is know as a beneficiary (or beneficiaries if there is more than one).   

Trusts come in many different varieties and are established for a multitude of purposes.  For example, some trusts are established to hold assets for minor children until they reach a certain age.  Some are established to take full advantage of any federal estate tax exemption for a spouse.  A special needs trust holds assets for disabled individuals.  Special needs trusts are often essential to enable a disabled person to receive money without impeding his/her ability to qualify for public benefits.   

Different types of trusts are required to comply with different rules, and state laws vary significantly in this area.  So you should consult with an attorney when considering making a trust part of your estate plan.