Legal Trust Information
There are many different types of legal trusts. Each state's law has its own requirements to establish a trust. Those with specific legal questions about trusts should consult an estate attorney.
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Purposes
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A legal trust allows one individual (the settlor) to place assets in the hands of a second individual (the trustee), usually for the benefit of a third individual (the beneficiary). Depending on the type of trust, it may allow a settlor to avoid probate, secure his assets against creditors, or provide for an unexpected event such as mental disability.
Res Requirement
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To be legal, a trust must have a "res." The res refers to the collection of specific assets designated for placement in the trust. Some jurisdictions, however, allow creation of trusts that will be funded by assets that only become available upon the death of the settlor (such as life insurance proceeds or assets left via a will).
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Formal Execution
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Almost all states require the trust to be set down in a written agreement which is then signed by the settlor. All states will also demand irrevocable legal transfer of the assets to the trustee.
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References
Resources
- Photo Credit signing a contract image by William Berry from Fotolia.com
