A trust agreement, also known as a living trust, is a legal document that outlines how an individual`s assets will be managed and distributed after their death. It is a popular tool for estate planning because it provides greater flexibility and control than a traditional will.
A trust agreement involves three parties: the grantor (the person creating the trust), the trustee (the person or institution appointed to manage the trust), and the beneficiary (the person or persons who will receive the assets of the trust).
The grantor transfers ownership of their assets, such as property or investments, to the trust. The trustee then manages these assets on behalf of the beneficiary. The grantor can also specify in the agreement how the assets should be distributed and when.
A trust agreement can be revocable or irrevocable. A revocable trust allows the grantor to make changes or revoke the trust entirely during their lifetime. An irrevocable trust cannot be altered or terminated once it has been established.
There are several benefits to creating a trust agreement. Firstly, it can help avoid probate, which is the legal process of distributing a deceased person`s assets. Probate can be time-consuming and expensive, and a trust can help streamline the process.
Secondly, a trust agreement can provide greater privacy than a will. Wills become public record after they are probated, but a trust agreement can remain private.
Thirdly, a trust agreement can provide greater protection for assets. For example, it can protect assets from creditors or lawsuits.
In summary, a trust agreement is a legal document that outlines how an individual`s assets will be managed and distributed after their death. It provides greater flexibility and control than a traditional will and can offer benefits such as avoiding probate, providing greater privacy, and protecting assets. It is an important tool for estate planning and should be considered by anyone looking to manage their assets and protect their legacy.