This article will focus on some of the key parties to a trust. There are generally three parties to a trust; the grantor, trustee, and beneficiaries.
The Grantor or Settlor is the person that creates the trust. This person will discuss with their attorney their wishes for the trust and the terms that will be drafted into the trust. This is the person that executes the trust.
The Trustee is the person who will receive the property of the trust and accepts the obligation to follow the terms of the trust. The trustee must be prudent with the property in the trust and is obligated to administer the trust for the benefit of the beneficiaries. A trustee can be an individual or corporation.
The Beneficiary or Beneficiaries are the people who will benefit from the trust property. They have a right to enforce the terms of the trust.
In a typical revocable trust meant to avoid probate, the grantor is usually all three parties.
Daredevil Dan Example:
Daredevil Dan walks into Miller & Miller Law Group PLLC and asks Miller & Miller Law Group PLLC to draft a revocable trust for him to avoid probate. After his passing, Daredevil Dan wants to leave 50% of the trust to his son Brian, and 50% of the trust to his daughter, Angela. He only wants Brian and Angela to have access to their money when they are 30 years old. He makes himself the primary trustee and makes his friend Charlie the successor trustee of the trust.
In this trust Daredevil Dan is the Settlor because he is creating the trust, the trustee, because he will manage the trust during his lifetime, and the beneficiary of the trust as the trust says that the trustee shall pay the income to Daredevil Dan during his lifetime and may use the principal of the trust for Daredevil Dan’s health, education, maintenance and support.
Daredevil Dan was lying on a beach in Hawaii when a coconut fell from a tree above him and hit him on the head, and that was the end of Daredevil Dan. When Daredevil Dan passed, Brian was 25 years old and Angela was 21 years old. Upon Daredevil Dan’s passing, the successor trustee, Charlie will act as trustee of Daredevil Dan’s trust. He will follow the terms of the trust and hold the money in trust for Brian and Angela until they reach the age of 30. At that point he will distribute the money outright to Brian and Angela.
Contact Miller & Miller Law Group PLLC for any questions you have regarding trusts.