Definition (cont'd from front page)
A (legal) trust is
not a separate legal entity. A trust is
best defined as a Relationship; a trust
is a device that holds property or
assets of some kind for the benefit of a
specific person, group of people or
organization known as the
beneficiary
(beneficiaries).
The person creating a trust is called
the
grantor, donor or settlor.
When a trust is established, an
individual or corporate entity is
designated to oversee or manage the
assets in the trust. This individual or
entity is called a
trustee.
A trustee can be a professional with
financial knowledge, a relative or loyal
friend or a corporation. There are
pluses and minuses to each type of
trustee. An individual trustee may
provide a more personal touch, but may
die or move away. A corporate trustee
may be less personal but provides
experience, investment skills,
permanence and impartiality. More than
one trustee can be named by the grantor
if he or she wishes.
The
person who manages a trust, the trustee,
has a legal duty to manage the trust’s
assets in the best interests of the
beneficiary. These management
duties could include rental properties,
investing funds or paying income to the
beneficiary.
The
scope of tasks that a trustee is
responsible for and how much access they
have to the funds should be specified in
the wording of the trust. A simple
or mandatory trust requires the trustee
to distribute income to the beneficiary.
A complex or discretionary trust may
allow the trustee discretion over the
assets, including cash, and income to be
distributed.
Traditionally, trustees are paid for
their services because of the amount of
work involved in managing a trust and
the threat of potential liability if
assets are mismanaged. Groups such
as Banks or Trust Companies usually
charge a percentage of the trust’s value
to handle the management (accounting,
investing, distributions, etc.) of the
trust. The percentage will vary
depending upon the size and complexity
of the trust. Individual trustees
often receive a flat fee or hourly rate.
No matter how a trustee is to be paid,
it should be agreed upon in advance.
If
you want to name someone as a trustee,
talk with that individual or entity
about the trust. Be sure they agree to
serve as trustee and can comply with the
terms of the trust. Because there is
generally such a high standard of duty
and liability imposed on trustees, and
individual or entity cannot be forced
into becoming a trustee just because he
or she is named in a trust document or
will. If your designated trustee is
unable or unwilling to perform, the
court will appoint a trustee for you,
unless a successor trustee, such as a
corporate trustee, is designated.
Providing Peace of Mind
It's
possible that a trust may be the answer
to your estate planning needs. Take the
time to evaluate carefully what you are
trying to accomplish, then consult a
Kuvasz Tax & Family Trust expert. A
well-written trust can help to provide
peace of mind for you and your
beneficiaries.
Types and Uses of Trusts
Learn more about
the different
Types of Trusts
and visit the
Uses of Trusts
page to learn some
of the common uses of
Trusts.
Learn more about
the different
Types of Trustees.
|
What
is a Trust?
