A trust document allows you to spell out how you want the property contained inside the trust to be distributed to beneficiaries. This article will discuss the various essential components of a trust that are required for its creation.
First, you need to have an individual who is creating a trust. This person is usually referred to as the trustor, grantor, or settlor. He or she — and it can also be a business entity — will supply the property that will be surrendered to the ownership of the trust.
Second, the trust needs to have an objective. Some trusts, for example, might have a singular objective of funding the needs of a special needs child or even a pet. In other cases, a trust might be more complicated and serve multiple objectives, like dispensing its assets out to multiple family members over a period of decades.
Third, you need to determine the type of trust. There are many different varieties of trust that can be used to achieve different objectives. A New York estate planning attorney will be able to interview his or her client to determine the best type of trust to suit the client’s needs.
Fourth, the trust must have property that it owns. Once the ownership of the property is transferred to the trust by the grantor, it is then referred to as trust property.
Fifth, the trust needs to have at least one beneficiary, but it could also have multiple beneficiaries. The beneficiary of a trust will receive some or part of the property inside the trust, much like the beneficiaries of a will can then receive assets from a person’s estate.
Sixth, the trust will also have a trustee. This is a trusted individual who will administer and manage the trust, and be charged with the responsibility of dispensing the trust’s assets to beneficiaries.
Finally, the trust needs to have rules. The rules of the trust will be a combination of state and federal laws that govern that particular type of trust in its administration. The rules will also include those that were created and specified in the trust document itself by the grantor of the trust.
New York residents with questions about trust planning, and what type of trust may be appropriate for their needs, may wish to speak with a qualified estate planning attorney.
Source: Dummies, “What Is a Trust?,” N. Brian Caverly and Jordan S. Simon, accessed Feb. 24, 2016
