A trust is usually created in writing by a legal document, sometimes called the “trust document.” There are two common types of trust document used to create a trust—a Last Will and Testament, or a Trust Agreement.
Creating a Trust by Will
A trust can be created as part of a Last Will and Testament. This is done by including language in the Will that creates a trust. A trust created by Will is called a “testamentary trust.” Once the Will is probated, the trust is created.
Creating a Trust by Trust Agreement
A trust can also be created by using a Trust Agreement, which is a type of contract between the Grantor and the Trustee. This type of agreement can also be called a “trust indenture,” or by other names. A trust created by a Trust Agreement is sometimes called a “living trust,” or an “inter vivos trust.” Once the Trust Agreement is properly signed, the trust is created.
The trust document (either the Will or the Trust Agreement) spells out how the trust works. At a minimum, the trust document should answer the following questions.
Who is the Grantor or Grantors?
Who is the Trustee or Trustees?
Who is (are) the Beneficiary or Beneficiaries?
How will the trust property be managed and used during the term of the trust? When does the trust end?
How will any remaining trust property be distributed when the trust ends?
Excerpt from the book Estate Planning for the Savvy Client: What You Need to Know Before You Meet With Your Lawyer by Mary L. Barrow, Esq.
Copyright ©2020, 2017 by Mary L. Barrow
THIS EXCERPT IS A BRIEF SUMMARY FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE FOR THE ADVICE OF COMPETENT LEGAL COUNSEL FROM AN ATTORNEY ADMITTED OR AUTHORIZED TO PRACTICE LAW IN YOUR JURISDICTION. YOU SHOULD ALWAYS CONSULT YOUR ATTORNEY BEFORE IMPLEMENTING OR CHANGING ANY ESTATE PLANNING STRATEGY.
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