How a Trust Works
A trust is a legal plan that helps manage property, money, or other assets.
The person in charge of the trust is called the trustee. The people the trust is meant to help are called beneficiaries. The trust document gives the trustee instructions about what to do.
People often use trusts as part of an estate plan. A trust can explain what should happen to property during life, after death, or if someone can no longer manage things on their own.
Who is involved in a trust?
The person who creates the trust is usually called the settlor, grantor, or trustmaker. The person or institution responsible for managing the trust is the trustee. The people or organizations who benefit from the trust are the beneficiaries.
What does the trust document do?
The terms of the trust are written in a trust document. This document explains what property belongs to the trust, who has authority to manage it, when beneficiaries may receive distributions, and what instructions the trustee must follow.
Why do people use trusts?
Trusts are commonly used in estate planning because they can help organize ownership of assets, provide instructions for incapacity or death, avoid unnecessary court involvement, and guide how property should pass to beneficiaries.
Depending on the type of trust, a trust may also support more advanced planning goals, such as asset protection, tax planning, business succession, or long-term family wealth planning.
Why does a trust need to be funded?
A trust is not just a document. To work properly, it usually needs to be funded. That means assets may need to be transferred into the trust or coordinated with the trust through beneficiary designations, deeds, account ownership, or other planning steps.