Kinds of Trusts

If you're not familiar with the law of estates and trusts (and why would you be?), you may be a little fuzzy on the concept of a trust. And on top of that, there are dozens of different kinds of trusts. The articles here are intended as a brief field guide to trusts, discussing the types you're most likely to run into.

Basically, the idea of a trust is pretty simple: it's an arrangement in which one person (the trustee) controls money for the benefit someone else (the beneficiary). That's it. The person who sets up the trust (the grantor or settlor) gives the trustee the legal authority to manage the trust money (or other property) and sets out instructions for how to spend it and when to end the trust.

Trusts can be used to accomplish all kinds of different estate planning goals. The most common is to avoid probate; the settlor gives the trustee written authority to distribute trust property, after the settlor's death, to the beneficiaries named in the trust document. No probate court authority is needed. Many trusts also are created to manage money for children until they are old enough handle it responsibly.