What is a Trust?

A trust is a legal instrument that allows you to convey property to a trustee, who then manages the property for the benefit of you and/or your named beneficiaries, usually family members. A trustee may be you, another individual or an institution. The trustee is empowered to manage your property only as permitted by the trust, being legally bound to adhere to its terms.

Trusts generally are created to instill and preserve family values and property, protecting your accumulated wealth from creditors, divorce, taxes and other claims against your estate after your death.

Here are a few types of trusts:

• Gift Trusts. Most often used by parents, grandparents, aunts and uncles, or other relatives to gift property and assets to children.
  
  
• Grantor Retained Annuity Trusts. During a set number of years, the trust provides you, the grantor, with periodic payments (usually to satisfy the annuity distribution obligation). At the end of the trust's term, proceeds are distributed to your beneficiaries.
  
  
• Qualified Personal Residence Trusts. You transfer a residence to the trust and retain the right to use it rent free for a specific number of years. As trustee, you also may sell the property to reinvest the money in a new residence or to create a grantor retained annuity trust
  
  
• Charitable Remainder Trusts and Charitable Lead Trusts. These trusts allow a set annuity to be paid for a specific number of years, after which the trust property passes to the trust beneficiaries. With the remainder trust, you (as grantor) and possibly other family members receive the annuity with the final trust property passing to a charitable institution at your death. With the lead trust, the reverse occurs - the charity receives the annuity and your beneficiaries receive the final trust property.

There are many other types of trust instruments that provide you protection for your property. After a discussion of your needs and desires, we can advise you on the best type of trust that offers you the most protection for your property while meeting your immediate needs.

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