What?s a trust?

Trust: A fiduciary relationship in which a person, called a trustee, holds title to property for the benefit of another person, called a beneficiary. The agreement that establishes the trust, contains its provisions and sets forth the powers of the trustee is called the trust indenture. The person creating the trust is the creator, settler, grantor or donor; the property itself is called the corpus, trust res, trust fund or trust estate, which is distinguished from any income earned by it.

Living trust or inter-vivos trust: A trust created while the donor is living.

Testamentary trust: A trust created by a will.

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Irrevocable trust: A trust that cannot be changed or terminated by the one who created it without the agreement of the beneficiary.

Charitable remainder trust: An irrevocable trust that pays income to one or more individuals until the grantor’s death, at which time the balance, which is tax-free, passes to a designated charity. This is a popular tax-saving alternative for individuals who have no children or who are wealthy enough to benefit both children and charity.

Charitable lead trust: A trust whereby a charity receives income during the grantor’s life, and the remainder passes to designated family members upon the grantor’s death. This reduces estate taxes while enabling the family to retain control of the assets.