A trust is an arrangement by which property is held by a trustee for the benefit of another person. The essential elements of a trust are:
- Trust Agreement. The contract between the parties for the management of the trust property, which is usually but not necessarily expressed in a formal document.
- Trustor. The person who forms the trust and transfers property into the trust is the trustor. This person may also be referred to as a donor, a grantor, or a settlor. The trustor formulates the specific terms of the trust agreement, to allow the trust to serve the exact purposes the trustor has in mind.
- Trustee. The person or entity with whom the trust and the trust property is entrusted. This person or entity controls the trust property, administers the trust, and is responsible to follow the instructions in the trust agreement.
- Beneficiary. The person who receives the benefits of the trust is the beneficiary. There can be more than one beneficiary, but usually we see a primary beneficiary.
- Trust Corpus. The property that the trustor transfers to the trust is known as the trust corpus or the trust property. This can be anything a trustor wants a trustee to manage, but we most commonly see liquid assets such as cash and securities, annuities, or real estate.
There are many types of trusts, categorized as living trusts that are created when the trustor is alive, or testamentary trusts created in a person’s Will. Trusts can be revocable or irrevocable. There are also insurance trusts and charitable trusts. We urge any persons interested in creating a trust to make an appointment with a local attorney with experience in this area of practice.
Ohana provides services as trustee under the name Ohana Financial Services, a Washington State Nonprofit Corporation.