When it comes to estate planning, there are a lot of legal terms that can be confusing. One such term is „trust.“ A trust is a legal agreement between a trustor, a trustee, and a beneficiary. This agreement outlines the rules for how assets in the trust will be managed and distributed.
The trustor is the person who creates the trust, often referred to as the „grantor“ or „settlor.“ The trustor has the legal right to transfer assets into the trust and can specify how these assets should be managed and distributed.
The trustee is the person or entity responsible for managing the assets in the trust according to the terms of the agreement. This can include investing the assets, paying bills, and distributing money to the beneficiary.
The beneficiary is the person or entity who will receive the assets in the trust. The trustor can specify when and how the assets will be distributed. For example, a trust can specify that the beneficiary will receive a fixed sum of money each year, or that they will receive a lump sum upon reaching a certain age.
When all three parties, the trustor, the trustee, and the beneficiary, come to an agreement, a trust is created. This agreement is a legal document that outlines the terms of the trust and the obligations of each party.
It is important to understand the terms of a trust before creating one, as they can be complex legal documents. It is recommended to consult with a lawyer who specializes in estate planning to ensure that the trust meets all legal requirements and accurately reflects the wishes of the trustor.
In summary, an agreement between a trustor, a trustee, and a beneficiary is called a trust. This agreement outlines the rules for how assets in the trust will be managed and distributed. Understanding the terms of a trust is important for anyone considering creating one, and consulting with a lawyer specializing in estate planning can help ensure that the trust is legally sound and reflects the trustor`s wishes.