In the legal sense, a
trust is a relationship whereby property is held by one party for the benefit
of another. A trust is created by a grantor or a settler, who is the individual
that transfers all or a portion of his or her property to a trustee. The
trustee manages the trust property for the benefit of the trust's
beneficiaries and according to the terms outlined in the trust agreement.
In many cases an individual will establish a
revocable living trust, which is one that can be amended, changed or revoked at any time. Often
times the grantor will act as the trustee during his or her lifetime and
appoint a successor trustee to take over when the grantor dies. A revocable
living trust affords the trust maker a great deal of flexibility and allows
him or her to use trust assets when he or she wants and in any amount.
Trust administration is the responsibility of the trustee and it involves overseeing the assets
held within the trust. Both
irrevocable and revocable trusts are common
estate planning tools, and the trust administrator is the individual that oversees the
distribution of the trust assets and in accordance with the express wishes
of the trust creator. A trustee or trust administrator has a fiduciary
duty to act in the best interests of the trust and to act in the best
interests of the beneficiaries at all times and he or she is held to the
highest standards under the law.
When the grantor or settler places assets into a trust, otherwise referred
to as "funding the trust," then ownership of the property is
vested in the trust, which in itself is a legal entity. The beneficiaries
of the trust will have limited rights to the trust property in accordance
with the terms of the trust; for example, the beneficiary may have the
right to use items within the trust but may not have the right to sell
them or transfer them or the beneficiary may have limited usage rights
that sets limits on what he may or may not do with assets held in the trust.
When a trust is created, a few things occur: beneficiaries are named or
someone who is entitled to use the trust assets is named, and a trustee
is designated. The trustee is the person responsible for trust administration,
this means that the trustee must protect the trust assets and ensure that
they are used in accordance with the grantor's wishes as set forth
in the trust.
To obtain more detailed information about trust administration, please
contact an Oakland County estate planning lawyer from
Stuart Lee Sherman, P.C. by calling (248) 919-8029.