So what exactly is a trust? And what a trust
is, if you want to kind of boil it down, is a trust is a rulebook. And it’s a rulebook
on how somebody, the trustee, is supposed to manage the assets that are actually in
the trust. So a lot of people make the mistake and think that a trust is like a corporation,
or it’s a little company, and it’s filed with the state, and you’ve got all these legal
things that you have to do. I mean, there are legal things you have to do with a trust
if you’re the trustee depending on the kind of trust it is. But all a trust is, is a rulebook.
The person that is subject to the rules is the trustee. The person who sets up the trust
can go by a variety of names. Sometimes who sets up the trust is called a trustor. Sometimes
they’re called a settlor. Sometimes they’re called a grantor. On our office we use the
term trust maker. So the person that sets up the trust writes out these rules, and say
to the trustee, I’m giving you this property to hold in trust, and you can invest it the
way I tell you to according to the rules I’ve set up, you can distribute it according to
the rules that I’ve set up, and when the term of the trust is over, I want you to take the
assets that are into this trust, and give them to the people that I’ve identified as
the beneficiaries of this trust–the way I’ve told you to do it. That’s all a trust is.
It’s a rulebook. The trust maker gives the money to the trustee, the trustee manages
the money and distributes the money to the beneficiary. In a revocable living trust,
the trust maker is the trustee is the beneficiary. All the same person. In an irrevocable trust,
the trust maker, the trustor, the settlor, gives the money typically to a third party
trustee that manages the money for yet another group of people, the beneficiary, typically
the children of the trust maker.