What is a Trust?
A trust is an arrangement based on a written agreement in which an individual or entity ("grantor") establishes ownership of assets for the benefit of certain individuals or organizations ("beneficiaries.") When property is placed in a trust the grantor has peace of mind knowing that their assets are being managed by a professional who is obligated to perform the duties set forth in the Trust Agreement. The trustee administers the assets according to the instructions in the written trust agreement.
A trust consists of four major components:
- Grantor – The grantor creates the trust and transfers assets into the trust.
- Beneficiary – The beneficiary receives the benefits (income and/or principal) of the trust. The grantor can also be a beneficiary.
- Assets – Assets are the properties, funds or investments held in the trust.
- Trustee – Trustee is the person or entity that manages the trust assets and distributes the property according to terms established by the grantor. The grantor may also be the trustee during his or her lifetime.