Trusts

A trust agreement is a document containing instructions to the trustee stating, for example, who is to receive income from the trust and when and how it is to be distributed. When the trust terminates, the agreement designates the distribution of the assets to the beneficiaries who are named in it.

The person providing assets for the trust is called the trustor or grantor. The grantor must actually change the title of ownership of each asset that will be placed in the trust from his or her name to ownership by the trust. The trustee manages the assets according to the directions in the trust agreement. The trustee can be the person creating the trust, several individuals, a corporate entity such as CGCM, a bank or trust company, or any combination of these.

A revocable living trust is a document created during an individual’s life that can be changed and terminated at any time. It is a legal arrangement by which an individual transfers ownership of assets to a trustee, who manages the assets for the beneficiaries designated in the trust agreement. Beneficiaries named in the trust agreement can be the individual who formed the trust, friends, family members, a college, hospital, library, charity or other organization. Any type of asset – cash, certificates of deposit, stocks, bonds, life insurance or real estate – can be placed into a living trust.

An irrevocable trust is one that cannot be altered, changed, modified or revoked after its creation. Once a property is transferred to an irrevocable trust, no one, including the trust maker, can take the property out of the trust. Irrevocable trust gives you the benefit of protecting your assets from creditors and lawsuits. It also lowers your estate’s tax liability and provides a plan for handling your estate’s assets.

“Special needs” trusts are a specific trust that is set up to benefit somebody who is dependent upon public assistance due to a disability. There are very specific rules which govern special needs trusts. They are, therefore, complex and an attorney who specializes in special needs trusts should draft the document and advise you on its use and purpose.