Trusts

  1. Trusts
  2. Types of Trusts
  3. Living Trust
  4. Advantages of a Living Trust
  5. Disadvantages of a Living Trust
What Is a Trust?
Generally, a trust is a relationship created with the intention of placing the right to possession of property, whether in land, personal property, or both, with one person (the trustee) for the benefit of another person (the beneficiary). Such a transfer must identify the property which is to be included in the trust (the corpus or principal) and show an actual delivery or surrender of control over the trust property to the Trustee. The person who creates the trust is usually referred to as the grantor.

Creating a Trust
A trust may be created by an individual or, under certain circumstances, by a court. A trust may be created for any purpose which is not illegal or against public policy.

When a trust is created by an individual, it is usually done through some form of a writing. These are usually referred to as express trusts. Express trusts may be created while the grantor is still alive (a living trust or inter vivos trust) and immediately effective, or it may be included within the language of an individual's Last will and Testament and intended to be effective after his death. Many times a grantor will provide for both types of trusts. In such cases, the individual's will typically contains language that directs that certain assets of his estate are to pour over and be administered according to the living trust previously created by him. A more detailed comparison between living trusts and testamentary trusts follows herein.

Declaring or Creating a Trust
Some times an express trust may not clearly reflect the grantor's intent, or it may be defective in some other respect. Such defects may arise when a trustee or beneficiary is not sufficiently identified, when the property of the trust is not clearly or fully identified, or when the delivery or surrender of the trust property to a trustee may be in question. In such instances, a court may be called upon to declare a constructive or resulting trust; to determine what the grantor intended, if there is evidence to support such a construction or result. Rather than being an express trust, such a trust is then said to be implied by law.

There are some instances in which a Probate Court may create a trust for or on behalf of individuals subject to its protection. The authority to do so generally arises in two situations; guardianships and wrongful death settlements.