General Definition
A trust is a legal arrangement when one person gives legal ownership of specific property to another, for the benefit of a third person. Out of the many reasons that people use trusts, one of the main reasons is to avoid probate, as trusts generally transfer faster than probate assets.
What is the common purpose of a trust?
Trusts can be used for a variety of legal purposes, including:
- Management of assets on behalf of family members
- Eliminating the need for probate
- Minimizing estate and other property transfer taxes
- Control over insurance polices and businesses
- Lowering estate taxes for married couples
- Care of an animal after the death of the owner
Do I have to do anything specific with the trust when the grantor passes away?
Generally, the answer is no. A trust is designed to transfer automatically after the grantor dies.
Most often, the grantor will write a document called a “Declaration of Trust,” prior to passing, which transfers the legal ownership of the property and names the beneficiary. Some situations may require action after the grantor passes, but not often.
The decedent will have transferred the property to a trustee, which is for the benefit of the third person, the beneficiary. As a personal representative, the duties surrounding trusts will be very limited, if not non-existent. It is possible however to be both the personal representative named in the will, and the trustee named in the Declaration of Trust.