What are the parts of a Trust?
To set up a trust these seven basic items are required:
- Person setting up the trust. The person is commonly known as the settlor, though the terms trustor or grantor are also used.
- Objective of the trust. Different types of trusts achieve a variety of specific estate-planning objectives. Some trusts are for a single estate-planning objectives, while others help achieve more than one goal.
- Specific kind of trust. Trusts come in many different varieties. When setting up a trust, a decision must be made as to what type of trust is needed and the rules are all followed for that particular type of trust. Make sure that it’s proper and legal, and carries out your intentions.
- Property. After placing property into a trust, that property is formally known as trust property.
- Beneficiary. Just like with other aspects of an estate plan (your will, for example), a trust’s beneficiary (or, if more than one, beneficiaries) benefits from the trust in some way, usually because the person or institution will eventually receive some or all of the property that was placed into trust.
- Trustee. The person in charge of the trust is known as the trustee. The trustee needs to understand the rules for the type of trust he or she is managing to make sure everything in the trust stays in working order.
- Rules. Finally, some of the rules that must be followed are inherently part of the type of trust used, while other rules depend on what is specified in the trust agreement. There are still more rules in state and federal law.