Introduction:
A trust is a separate entity that holds assets for the benefit of
named persons. The person who creates the trust is the “Grantor” (also called Donor or Settlor). The persons who benefit from the trust are the “Beneficiaries”. The trust itself is a document that often looks and feels like a will. The difference is that a trust actually owns assets which are managed by the “Trustee”.

Many kinds of trusts:
Much confusion arises because there are many different “flavors” of trusts, meaning that there are many different types of trusts and various reasons, purposes and goals for a trust. If a person tells me they have a “trust” it is like telling me they have a vehicle.  Without more information, I don’t know anything about the vehicle. Is it a car, motorcycle, bicycle, truck, scooter, boat, etc.?

Revocable Living Trust:
Many people are familiar with one kind of trust called a revocable living trust. This kind of trust works like this:

• The grantors (usually a married couple) create the trust making themselves trustees and lifetime beneficiaries;
• They designate whoever they want (usually their children) as beneficiaries upon their death;
• They title their assets in the name of the trust so that the trust is the technical “owner”;
• The couple are their own trustees, maintaining control of the assets in the trust during their lifetime;
• At death, the successor trustees (usually their children) distribute the assets to the beneficiaries (usually the same children).

Among its benefits, a revocable living trust provides for orderly distribution of assets at death and provides a vehicle for managing assets during the incapacity of the grantors. It is generally thought of as a will substitute which avoids probate at death.

A revocable living trust is not an asset protection or tax saving tool. Different kinds of trusts are used to accomplish these goals.

Other types of trusts:
Whether done in conjunction with a revocable living trust or in a different trust document altogether, trusts can accomplish a myriad of good results. For example trusts can:

• provide asset protection from future nursing home costs.
• reduce the likelihood of will contests.
• coordinate distribution of assets through one vehicle.
• avoid probate (and double probate if there is out-of-state real estate).
• provide maximum privacy.
• prevents court control of a bequest to a minor.
• save on estate taxes.
• provide for distribution to beneficiaries at specified ages or over a period of time.
• provide for assets to be held for beneficiaries with special needs.
• provide for assets to be held for beneficiaries who have creditors or who cannot handle money.
• provide for education of grandchildren.
• provide for a second spouse or partner.
• provide for pets.
• protect assets for Medicaid eligibility.

Conclusion:
The use of trusts is not new . . . far from it. Trust law and its foundation goes back centuries. What is new is that trusts have found a home with the middle class. The middle class has discovered that trusts can provide solutions to common estate planning, asset protection and elder law concerns. In our practice it is common for our clients to embrace these very versatile tools.