A trust is a legal arrangement that allows one person to hold a legal interest or right for the benefit of another person.
- Trustee - The person who holds the legal property interest is called the trustee.
- Beneficiary - The person for whom the property is held is called the beneficiary.
- Grantor - The person establishing the trust is called the grantor.
A trust can be revocable or irrevocable. Revocable trusts may be changed or terminated by the grantor at any time and for any reason. An irrevocable trust, once established, cannot be terminated or altered for any reason. A trust designed to go into effect upon your death is called a testamentary trust. However, experienced estate planning attorneys often use living trusts, created while you are still alive, as a way to avoid probate and its associated costs.
Trusts allow the trustee to direct or control the property or other legal rights that are in the trust. Trustees have a legal duty to make decisions regarding the trust property in the best interests of the beneficiary. In addition to true legal trusts, other trust-like instruments you may use to involve others in the execution of your wishes include the following:
- Power of Attorney - A power of attorney gives someone you trust the ability to make decisions for you when you are incapacitated. That person does not have to be an attorney, although he/she will be known as your "attorney." A power of attorney used to address broad issues such as medical care decisions is called a Health Care Power of Attorney. A power of attorney can also address narrow issues and simple decisions, including the purchase of a single parcel of real estate.
- Health Care Directive and Living Wills - In a health care directive, you make the decisions regarding your medical care for all situations should you become incapacitated. A living will is a narrower form of a health care directive, generally limited to cases in which death is imminent. Every state recognizes a patient's right to make fundamental choices about the care and treatment he/she receives at or near the end of life. Health care providers must generally honor the terms of living wills and advanced medical directives.