There are many things to consider when working on your estate planning. One option that many people consider is the establishment of a trust. A trust is created to help manage one's property and finances by making certain that it gets properly transferred to the people mentioned in the trust. Before we elaborate, there are a few terms that should be defined to make things easier.
A trustor, also known as a grantor or settlor, is essentially the owner of the property. A trustee is an institution or person who will manage the property contained within the trust. The trustee is typically a professional who will receive compensation for allocating the contents of the trust. The trustee also has a duty to act in the best interests of the person who is receiving the property or financial benefits, known as the beneficiary. This is called a fiduciary relationship. If a trustee fails to fulfill their duty, they may be liable for damages to the beneficiary.
When working on your estate planning, having a firm understanding what a trust can do is important to preserve your wishes. A trust will assure that not only the property or money gets properly allocated to the right people, but it could also specifically state how the money is to be spent.
For example, a trustor may see that certain funds are specifically used to pay for a family member's education and nothing else. The beneficiary in this example must spend the money based on the wishes of the trustor; the money cannot be spent in any other manner.
Source: findlaw.com, "Trusts: An Overview," Accessed June 12, 2017