A trust is an important tool in estate planning. A trust is a relationship that allows for the separation between the control and management of an asset and the ability to benefit from that asset.
It is the legal relationship between three parties: the settlor (who sets up the trust and contributes to it), the trustee (who holds the legal title and is responsible for control and management of the asset) and the beneficiary or beneficiaries, who are entitled to receive the benefit of the asset, as directed by the settlor.
Trusts offer flexibility and can serve many purposes and help solve a number of estate planning concerns. Some of the benefits and uses of trusts include:
There is a distinction between trusts that can be set up during your lifetime (inter vivos trusts) and those that take effect after your death (testamentary trusts).