Trusts

In common law legal systems, a trust is an arrangement whereby property (including real, tangible and intangible) is managed by one person (or persons, or organizations) for the benefit of another. A trust is created by a grantor who entrusts some or all of their property to people of their choice (the trustee or trustees). The trustees hold legal title to the trust property but they are obliged to hold the property for the benefit of one or more individuals or organizations (the beneficiary), usually specified by the grantor, who hold equitable title. The trustees owe a fiduciary duty to the beneficiaries, who are the "beneficial" owners of the trust property.

The trust is governed by the terms of the trust document, which is usually written. The trustee is obliged to administer the trust in accordance with both the terms of the trust document and the governing law.  In the United States, the grantor is also called the trusted, settler, donor or creator.

A trust is useful not only for large estates but also for small estates with minor children or estates where there are no children. If disinheriting is an issue, a trust is the best way to accomplish that. 

Even with a trust it is necessary to have a will. 

Watch Congress in 2010 for changes in the Federal Estate Tax.

Trustees

The trustee can be either a person or a legal entity such as a company. A trust may have one or multiple trustees. A trustee has many rights and responsibilities; these vary from trust to trust depending on the type of the trust. A trust generally will not fail solely for want of a trustee. A court may appoint a trustee. Trustees are usually appointed in the document (instrument) which creates the trust. Normally the grantor serves as the initial trustee. A successor trustee comes in at the disability or death of the grantor/trustee.

A trustee may be held personally liable for certain problems which arise with the trust. For example, if a trustee does not properly invest trust monies to expand the trust fund, he or she may be liable for the difference. There are two main types of trustees, professional and non-professional. Liability is different for the two types.

The trustees are the legal owners of the trust's property. The trustees administer the affairs attendant to the trust. The trust's affairs may include investing the assets of the trust, ensuring trust property is preserved and productive for the beneficiaries, accounting for and reporting periodically to the beneficiaries concerning all transactions associated with trust property, filing any required tax returns on behalf of the trust, and other duties. In some cases, the trustees must make decisions as to whether beneficiaries should receive trust assets for their benefit. The circumstance in which this discretionary authority is exercised by trustees is usually provided for under the terms of the trust instrument. The trustee's duty is to determine in the specific instance of a beneficiary request whether to provide any funds and in what manner.

By default, being a trustee is an unpaid job. In modern times trustees are often lawyers or other professionals who cannot afford to work for free. Therefore, often a trust document will state specifically that trustees are entitled to reasonable payment for their work.