A trust is a mechanism whereby a person, known as the “grantor”, transfers assets to another person, known as a “trustee”, with instructions, known as the “trust agreement”, stating exactly what the trustee is to do with those assets.
A trust may be created during lifetime. This is known as a “lifetime” or “inter vivos” trust. A trust may also be created by a person’s will. This is known as a “testamentary trust.”
Trusts perform a wide range of tasks. They manage assets for minor children, for adult children, for incapacitated persons and even for pets. There are trusts created to reduce estate taxes. Trusts can also be used in some circumstances for asset protection. They are commonly used to protect assets in case a person requires long-term care. Some people use trusts to completely avoid probate.
Trusts are far more common now than in the past since they have such great utility. They are frequently used by persons of all economic positions.