Trust definition
A trust is a legal arrangement for managing property according to a set of instructions. It identifies who is responsible for the property, who may benefit from it, and what should happen under circumstances described in the trust document.
Three roles are central to the arrangement: the settlor, trustee, and beneficiary.
- The settlor creates the trust and sets its terms.
- The trustee holds or manages the property according to those terms.
- The beneficiary is the person the arrangement is intended to benefit.
One person may fill more than one role. For example, you may create a revocable living trust, serve as its initial trustee, and benefit from its property during your lifetime.
What does a trustee do?
A trustee follows the instructions in the trust and manages the property entrusted to them. Those instructions may address how property is used during your life, who takes over if you cannot manage it, and how property is handled after your death. The trustee’s responsibilities depend on the trust terms and the property under their control.
Does a trust automatically cover all assets?
No. Signing a document does not automatically change the ownership of your home, bank accounts, or business interests. Property generally needs to be transferred into the trust for the trustee to manage it under those instructions. Moving property into the trust is called funding it.
Some assets call for a different kind of coordination. For example, retirement accounts and life insurance policies commonly have beneficiary designations that should be reviewed alongside the trust rather than simply retitled into it. If an asset remains outside the arrangement, its ownership terms, beneficiary designation, or other applicable rules may determine where it goes.
The document supplies the instructions; the way your assets are owned determines which instructions can be carried out. Reviewing both is how you move from a signed document toward an estate plan that works as intended.
