A trust is a legal arrangement in which one person (the grantor) transfers control over property or assets to another person (the trustee). The trustee administers the assets in the trust on behalf of a beneficiary of the grantor's choosing. The assets in the trust belong to the trust itself. A trust can be set up to go into effect when the grantor dies or while he/she is still living. Trusts are often exempt from going through the probate process. However, many types of trusts are still subject to estate taxes.

The funds and assets in a revocable trust are still partially under the control of the grantor since he/she can choose to change the terms at any time. Also, the grantor can set up the rules of the trust so that withdrawal of funds by the beneficiary is closely controlled. This can be done to ensure that the grantor's children or grandchildren do not deplete the fund with frivolous spending. The grantor gives up all ownership and control in an irrevocable trust. This may be considered the same as making a gift of the assets depending on the details of the paperwork. The trust or the benificiaries are then responsible for all taxes associated with income generated by the trust.