This duty of loyalty is known as fiduciary duty, and it places a very high (and legally enforceable) standard of care and expectations upon the trustee. The trustee is required to act in the best interest of the trust beneficiaries. In such event, it may make sense to name a qualified bank or trust company to undertake this responsibility. However, other individuals do not have family members or friends that they feel could (or should) take on this role. Some individuals will name a family member or friend as the primary or alternate trustee. If desirable, more than one individual may be named to serve as co-trustee. The primary duties of any trustee are twofold: (1) to prudently invest and protect the assets of the trust, and (2) to make distributions to the trust beneficiaries according to the terms of the trust agreement. The trustee is the person who is responsible for all aspects of the administration of a trust. A well drafted trust agreement should plan for certain contingencies, such as what to do if the initial beneficiaries are no longer living. The trust agreement identifies the beneficiaries and tells the trustee when distributions of trust property (including the original assets placed in trust, as well as the income on such assets) should be made to the beneficiaries. He or she names a trustee to hold the property according to the terms of this trust agreement. To create a trust, the grantor enters into a written trust agreement. Using an irrevocable trust allows you to minimize estate tax, protect assets from creditors, and provide for family members who are minors, financially irresponsible, or who have special needs. Why would I want to use an irrevocable trust? This is distinguished from a revocable trust, which is commonly used in estate planning and allows the grantor to change the terms of the trust and/or take the property back at any time. What is an irrevocable trust?Īn irrevocable trust is simply a trust with terms and provisions that cannot be changed by the grantor. Finally, the person who receives the benefit of the property held in the box is known as the beneficiary. The person that oversees the property in the box is the trustee. The person placing the property into the trust is known as the grantor of the trust. From the Estate Planning and Probate GroupĪ trust is a legal arrangement that provides for the ownership, management, and distribution of property. Think of a trust as a box into which someone places property.
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