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Many people hear about “trusts” but don’t understand how they work. First of all, a trust is a legal entity in which a person, called a “Trustee,” holds legal title to “trust property” for the benefit of someone called a “beneficiary.” We will here discuss the most common form of trust, a revocable trust, also sometimes called a “living trust.”

In a revocable trust the person creating the trust is usually the Trustee and also the primary beneficiary of the trust while they are alive, e.g. “living trust.”  Thus when the trust is created for you, and you “fund” the trust (more on funding in another article), you maintain control and dominion over your property and use it for your benefit, just as you do without a trust. 

As long as you, the creator of the trust, are alive and competent and acting as the Trustee, you can sell, encumber, mortgage, and give away the property in your revocable trust. Your maintain control. It is called a “revocable” trust because you can change your mind about its provisions. You may change the way you want the property managed after your death.  You can change the person or persons you have named as your Successor Trustee.  You can take property out of trust and put more property in the trust.  Usually the trust property is also used only for your care.  Only after your death is the property managed and distributed to others as you have directed in the trust document. 

You appoint a “Successor Trustee” in your trust document, i.e. the person to take over in the event of your incapacity or death.  The Successor Trustee takes title to your property at your incapacity or death.  Your Successor Trustee manages and distributes the property as you have directed in the Trust document, without the necessity of court intervention. 

Having appointed your Successor Trustee, no court is needed to intervene if you become too sick to manage for yourself.  No conservator of your assets is necessary. No stranger need be appointed to manage your money and assets for you.  This is also how the trust is used to avoid probate. At your death your Trust acts as a will substitute and your Successor Trustee pays your last expenses and taxes and distributes your property as you have directed. 

A trust maintains privacy for you and your family.  It permits you to appoint who you desire to take care of you when you are unable to because of illness. It avoids family fights and dissension. It allows you to control the distribution of your property after your death. It even allows you to establish more trusts within your trust that will continue to control the distribution of your property for your loved ones after your death.  (See article on “Trusts Within Trusts.”)

A trust is an important and complex document.  It is subject to complex laws about title, taxes, etc.  It should be customized for you and your concerns by a competent lawyer, familiar with the laws and familiar with the facts of your case and your individual concerns and desires.
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