Estate Planning 101 – Trusts – Basic Parties

Context

This Estate Planning 101 blog series began with this foundation: there are three essential topics for a basic estate planning discussion in Oklahoma.

The first of those topics was: 3 basic documents. Discussions of the Last Will and Testament, Durable Power of Attorney, and Advanced Directive for Healthcare followed.  There was even an extended look at what happens if you die without a will.

The series will now begin to look at the second topic: whether a Trust might make sense in the client’s particular situation.

Basic Parties

Volumes could be written about Trusts (and have been). This blog series is a basic overview.  And any basic overview starts with the basic questions, such as who is involved.  At its core, a Trust is an agreement which links three parties together.

The first party is called a Settlor. Sometimes other terms are used such as: Trustor, Trustmaker, or Grantor.  This is generally the creator of the Trust.  This is a person who owns property individually and want to place it “in trust.”

The second party is called the Trustee. This is the person who manages the property in trust.

The third party is called the Beneficiary. This is the person who benefits from the property in trust, whether through distributions of income or property or otherwise.

Classic Example

Think in years past of a wealthy industrialist (Settlor) placing money with the local bank and trust company (Trustee) for them to manage and invest, for the benefit of the wealthy industrialist’s children (Beneficiaries).

Don’t Take the Classic Example Too Far

The classic example above is good for separating out the parties and initially thinking about what a Trust is, but do not take it too far.

Trust are not just for wealthy industrialists. They can serve a number of helpful purposes for a wide range of people.

And the three parties do not have to be separate and distinct; for example, the Settlor of many Trusts set up today also will act as the initial Trustee and Beneficiary of the trust. Then over the life of the Trust, say as the Settlor dies, others will become Trustees and Beneficiaries.

The next few blog posts will dig further into the basics of trusts.

If our office may be of assistance to you in these areas, do not hesitate to contact us at (580) 338-6503 or at coryhicks@fieldandhicks.com or using any of our contact information in the profile.  You can also visit www.fieldandhicks.com for more information.

This blog contains general information and the opinions of the author – not legal advice; you should seek the advice of competent counsel (attorney/lawyer) when considering any legal issues.