What is a Trust?

What is a Trust?

  • November 5, 2012


A trust is an agreement that certain property should be managed by one person (the trustee) for the benefit of another (the beneficiary).  There are three basic trust types: revocable, testamentary and irrevocable. 

A revocable trust is often used as the centerpiece of the family’s estate plan.  Upon creating the trust, the Trustmaker(s) place property into the trust, which then protects the trust from the probate process.  Normally with a revocable trust, the Trustmaker is also the trustee and beneficiary of the trust, and retains all the same powers of ownership including changing or terminating the trust.

A testamentary trust is directions for the creation of a trust contained in an individual’s will.  Essentially, the individual is requesting the court during probate to create a trust for certain assets. 

An irrevocable trust is often used to plan for estate taxes or long term care.  It operates with the same general principles as a revocable trust; however, it cannot be changed as readily.  It allows people to retain control over their property while positioning their assets in a manner that prevents medical costs from depleting their life savings.