When most folks think of trusts, they imagine wealthy families, large estates, and Ivy League kids born with a “silver spoon.” While the stereotype may be accurate, a trust can be a very useful planning tool for the average family, and they’re much more common than you might think. So, what is a trust, and how does it work?
Technically, a trust separates the legal title to property, which is associated with the responsibilities of ownership, from its equitable title, or the enjoyment of that property. It may be easier, however, to think of a trust as a bucket, into which you can put all sorts of property – houses, cars, money, etc. A trustee is empowered to hold the bucket, preserve the items within it, and, following very specific directions, remove items from the bucket and give them to someone else, known as a beneficiary.
Because the beneficiaries don’t control the bucket, a trust can be a great way to hold property for minor children, or for persons with a disability or who receive public assistance, or for people who don’t handle money well. Trusts can be created to protect assets, accomplish charitable giving, further education, minimize taxation, or for just about any purpose under the sun. To learn more, contact McDannold Law today.