Question: What is a Trust?
Answer: A Trust is a legal relationship between two or more parties forming an agreement that allows a trustee, who is an individual or a company, to take control of real or personal property or to hold funds in order to protect them for the person granting the trust or the beneficiary named in the trust.
Question: What is a revocable trust?
Answer: A revocable trust or "living trust" is set up to take assets out of your name and put in trust, mainly to avoid probate.
By doing this, you legally relinquish ownership of the assets listed in the trust, but the trust can be revoked by you at any time prior to death and your assets put back in your name.
You can name yourself as the trustee along with someone else, such as your spouse or a child, as co-trustee.
Question: What is an irrevocable trust?
Answer: An irrevocable trust is usually set up to for estate tax benefits and cannot be revoked.
You are, in essence, giving away the assets that are placed in this type of trust, but you specify the beneficiary, the purpose of the assets and income in the trust, and how they are to be used, thus, you still maintain some control of them but not physical control.
You cannot name yourself as the trustee but you can appoint someone you trust, such as a family member, friend, a trust company, an attorney or a bank.
Question: Are there different classifications of trusts?
Answer: Yes. Trusts can be can be classified in the manner in which they are created. The most common types of trusts are express, resulting, and constructive.
Question: What is an Express Trust?
Answer: An Express Trust is a trust that is created by a party's conveyance of property by will or deed with the intent of the property being held in trust for another party.
Question: What is a Resulting Trust?
Answer: A Resulting Trust is one that is created when the intention is inferred or presumed by a court of equity, from the terms of the disposition of the property or from the circumstances of such disposition.
Note: If a person buys a property but takes title of the property in the name of someone else, the courts may rule that a Resulting Trust is created in favor of the person who initially bought the property and he will be held as the real owner.
Question: What is a Constructive Trust?
Answer: A Constructive Trust results from a conveyance of property in which no intention to create a trust is inferred but in which a court will compel the person having legal title to hold it for the benefit of someone else.
Note: Whenever legal title to a property has been acquired in a fraudulent manner, the courts will treat the guilty person as the trustee and the guilty person will be required to turn the property over to the defrauded party.
If you are thinking of having a trust prepared, it is advisable to contact an attorney or paralegal for advice.