A trust is a means of transferring property—whether it is tangible or intangible— or funds from one party to another. It is a legal tool that allows transition of ownership through a third party, who manages the estate until such time that the original owner wishes to pass on the property to another in accordance with the terms stipulated by the former. A trust agreement, also known as a declaration of trust, is the legal document that provides all the information regarding the disbursement of a person’s estate upon his or her death.
A trust is created by a party called a trustor, donor, grantor, or settlor, and is managed by a party, called the trustee or fiduciary. The trustees have a duty to manage the trust for the beneficiaries, the recipients of the estate. Such fiduciaries are obligated to manage the estate in the best interests of the beneficiaries. The estate is legally referred to as the asset. There are 2 general categories of trusts. First is a living trust, and second is a testamentary trust.
Many types of trust exist depending on the terms and conditions stipulated by the trustor or grantor. Some trusts may have conditions or terms that are open to change by the grantor and some trusts are irrevocable in that once they are signed and formalized, they can no longer be changed.
People make use of a trust in order to legally transfer assets to an individual. This individual may not necessarily be an adult, in which case the trust cannot be executed. Some states require that an individual reach the age of majority before receiving the benefits of a trust. This age of majority may differ among states and nations but it is common for it to be pegged at 18 or 21 years of age.