Trusts: Key Terms to Understand
All adults should be thinking about estate planning. While common myths suggest that estate planning is only for older adults or adults with chronic and serious illnesses, estate planning is crucial for many reasons. Trusts are one type of tool in the estate planning process. Although establishing a trust might not be appropriate for all adults who are engaged in estate planning, they are important for far more people than you might think. There are many misconceptions about trusts and who they are designed for, and what they can do. Many people assume that trusts are only for extremely wealthy Connecticut residents. While trusts can benefit wealthy adults, they can also provide important benefits to a range of adults regardless of their economic circumstances.
A Canton trusts lawyer can assist you in determining whether a trust could benefit you. In the meantime, we can provide you with more information about some of the key terms used in discussing trusts, which can help you to understand some of the central elements of different types of trusts.
What is a Trust?
A trust is a legal vehicle through which a person’s assets are put into the control of a third party for the benefit of another person. In less complex terms, it is a legal device that protects assets for a beneficiary. There are many different kinds of trusts, and they have different purposes. Some types of trusts can only have certain kinds of beneficiaries (such as a special needs trust), while other types of trusts can benefit any person or entity named as a beneficiary.
What is a Revocable Versus an Irrevocable Trust?
In general, trusts can be “revocable” (amended or even canceled) within the lifetime of the person making the trust, or “irrevocable” (cannot be amended).
What is a Settlor?
A settlor is a person who establishes a trust. Sometimes a person who creates a trust is also known as a trustor or a grantor.
What is a Beneficiary?
A beneficiary, in the context of a trust, is a person who is the intended recipient of the assets held in a trust. Depending on the type of trust, a beneficiary may be a person or an entity (like a charity).
What is a Trustee?
A trustee is a person or entity who administers the trust and has a fiduciary duty. A trustee must be a party separate from the settlor (the person making the trust) and the beneficiary (the person for whom the trust assets are intended).
What is an Account?
When it is used in the context of a trust and trust administration, an account is the trustee’s report concerning any financial activities related to the trust, including and disbursements or distributions.
Contact a Connecticut Trusts Attorney
Should you consider a trust? Your circumstances could make a trust beneficial to you. If you are just beginning the estate planning process, or if it is time to review your estate plan, it is important to discuss establishing a trust with an experienced Canton trusts lawyer at the Law Office of Brian S. Karpe. Contact us today to find out more and to discuss your estate planning needs.
Sources:
ctprobate.gov/Documents/User%20Guide%20-%20Understanding%20Trusts.pdf
law.cornell.edu/wex/estates_and_trusts
