Trusts: The Basics

A trust is nothing more than a legal document that creates a holding place for property. A trust holds temporary title to assets, which are ultimately distributed to heirs. Placing assets in one or more trusts legally separates some or all of the property rights inherent in personal ownership. These include legal title, control and economic benefit. Under personal ownership, all property rights, taxes and other obligations are vested in a single person—the owner. Under trust ownership, those rights and obligations are vested in two or more persons. Although trusts may vary according to their goals, they all have some features in common. All trusts have four parties:
1.    The grantor, trust maker or donor: the person who establishes the trust and puts assets in the trust.
2.    The trustee: the person or institution appointed by the grantor to manage the trust.
3.    The interim beneficiary: the person (or persons) who benefits from the trust during the life of the trust.
4.    The ultimate beneficiary: the person (or persons) who receives the assets at the termination of the trust.