Death in the Family #3: Trusts
A trust is a legal entity, typically created by a trust agreement or court order, that enables an individual or an entity, called the trustee, to control the trust assets for the benefit of a third-party beneficiary, or the grantor. The trustee invests, manages and distributes trust property according to the provisions of the trust document or court order that created the trust and/or state statutes governing trust administration. A common type of trust is a revocable living trust. Assets transferred to a living trust during the grantor’s lifetime avoid probate and thus can be quickly transferred to the trust beneficiaries upon the grantors death. Such a transfer, however, does not remove such property from the decedent’s estate for estate tax purposes.