What Is a Trust?

A trust is a legal arrangement in which one person, known as the trustee, holds property or assets for another person, known as the beneficiary. The trustee has a fiduciary duty to manage and protect the assets of the trust according to its terms. Trusts can be used for many purposes such as providing financial security for family members after death, avoiding probate court proceedings when transferring ownership of an asset, minimizing taxes on inherited wealth and protecting assets from creditors.

Trusts are created by written documents that specify how they should be managed and who will benefit from them. They may also include instructions about how funds should be distributed upon death or other events specified in the document. A trust must have at least three parties: a grantor (the creator), a trustee (the manager) and beneficiaries (those who receive benefits). Depending on their purpose trusts may last indefinitely or terminate upon certain conditions being met.

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