What are the uses of a trust?
Protecting Your Assets Using Sound Legal Techniques!
Philosophically a trust is used to seperate ownership from beneficiary for the purpose of protection. Protection might be from creditors or protection from mismanagement for the safekeeping of assets and protection of minor children, the disabled or another designated beneficiary likely a family member or loved one.
Trusts protect the beneficiary. The beneficiary of the trust can be anything imaginable (or legal). Animal care, upkeep of art collections, maintenance of estates, disabled persons, children, spouses and not for profit companies are all examples of beneficiaries and the benefit use of trusts. These are only a few of the many examples, but most common is the use of a trust for the care of children.
A trust set up for the benefit of minor children can avoid the necessity of further legal proceedings, such as the appointment of a conservator. A conservator is someone who is appointed by the court to control the assets of minor children. Conservators are restricted by law and must be bonded and file annual accountings with the probate court.
In establishing a trust, the trustor selects a trustee and specifically instructs the trustee on how the assets will be used for the beneficiary. A trust for the benefit of minors often takes effect when both parents have died. It is usually set up to provide for the support, care and education of the children until they have reached the age set by their parents to actually receive the assets being held by the trustee.
Putting property in trust transfers it from your personal ownership to the trustee who holds the property for you. The trustee has legal title to the trust property. For most purposes, the law looks at these assets as if they were now owned by the trustee. For example, many trusts have separate taxpayer identification numbers. But trustees are not the full owners of the property. Trustees have a legal duty to use the property as provided in the trust agreement and permitted by law. The beneficiaries retain what is known as equitable title, the right to benefit from the property as specified in the trust.
The donor may retain control of the property. Putting assets “in” a trust does not mean that they change location. Think of a trust, instead, as an imaginary container. It is not a geographical place that protects your car, but a form of ownership that holds it for your benefit. On your car title, the owner blank would simply read “The Mr. Smith Trust.”
After your trust comes into being, your assets will probably still be in the same place they were before you set it up–the car in the garage, the money in the bank, the land where it always was–but it will have a different owner: the Mr. Jones Trust, not Mr. Jones.