Definition of a Trust

Series Summary

Estate planning is a complex business. Some who call themselves estate planners are financial advisors and others are estate planning attorneys with the power to draft legal documents. Estate planning is important because only through proper planning can an individual hope to help his or her family dodge inordinate federal taxes, handle his or her assets, avoid probate courts, save money all around and ease headaches after death or in case of incapacitation. Estate planning covers living trusts and wills that help define how someone’s resources can be used if he or she is incapacitated or deceased, and it is no wonder that many families are seeing the importance of estate planning considering the current economic clime. In this free estate law video series, a board-certified estate planning and probate lawyer, Brad Wiewel, gives information about estate planning. Wiewel discusses the ins and outs of estate planning, including revocable and irrevocable living trusts, wills and living wills, handling deeds and assets, powers of attorney and more. He answers questions on the pros and cons of certain legal documents, when to start planning, how to choose executors and what people really mean when they ask him about living wills or irrevocable trusts. Nothing contained in this video is to be considered as the rendering of legal advice for specific cases, and viewers are responsible for obtaining such advice from their own legal counsel. This production is intended for educational and informational purposes only.

Video Transcript

"So what exactly is a trust? And what a trust is, if you want to kind of boil it down, is a trust is a rulebook. And it's a rulebook on how somebody, the trustee, is supposed to manage the assets that are actually in the trust. So a lot of people make the mistake and think that a trust is like a corporation, or it's a little company, and it's filed with the state, and you've got all these legal things that you have to do. I mean, there are legal things you have to do with a trust if you're the trustee depending on the kind of trust it is. But all a trust is, is a rulebook. The person that is subject to the rules is the trustee. The person who sets up the trust can go by a variety of names. Sometimes who sets up the trust is called a trustor. Sometimes they're called a settlor. Sometimes they're called a grantor. On our office we use the term trust maker. So the person that sets up the trust writes out these rules, and say to the trustee, I'm giving you this property to hold in trust, and you can invest it the way I tell you to according to the rules I've set up, you can distribute it according to the rules that I've set up, and when the term of the trust is over, I want you to take the assets that are into this trust, and give them to the people that I've identified as the beneficiaries of this trust--the way I've told you to do it. That's all a trust is. It's a rulebook. The trust maker gives the money to the trustee, the trustee manages the money and distributes the money to the beneficiary. In a revocable living trust, the trust maker is the trustee is the beneficiary. All the same person. In an irrevocable trust, the trust maker, the trustor, the settlor, gives the money typically to a third party trustee that manages the money for yet another group of people, the beneficiary, typically the children of the trust maker."