What Is a Trust?
Trust Forms are documents that serve as a drafting resource for a range of estate planning scenarios. Find the forms tailored to your specific situation down below. The most commonly used forms include the following:
- Living Trust. This trust form represents a fiduciary relationship created during the settlor or grantor’s lifetime where they designate a trustee for managing the grantor’s assets for the benefit of an eventual beneficiary. Trustees have a fiduciary duty to manage the trust safely and in the best interests of the trust's beneficiaries. Upon death or incapacity of the grantor, their assets are easily transferred ass outlined in the agreement, bypassing the complex legal process of probate. Living trusts may be revocable and irrevocable.
- Revocable Living Trust. This trust allows the settler to amend trust rules at any time, as well as change beneficiaries or undo the trust. In addition, the settler can designate themselves as the trustee and take control of assets within the trust. The income earned by the trust's assets goes to the settler and is taxable.
- Irrevocable Trust. The terms of this document cannot be modified or terminated unless the grantor's named beneficiaries give permission. The trustee effectively becomes the legal owner and the grantor ceases to have any rights of ownership to the assets and the trust. Therefore, assets placed in the trust are removed from the taxable estate of the grantor.
- Declaration of Trust. This written or oral statement indicates a property is being held and transferred into a trust for the benefit of other individuals. It outlines who the beneficiaries are if the trust can be amended or revoked and by whom, who will serve as a trustee, and what powers they hold. It also presents the trust's purpose and how the trustee may manage the assets.
- Trust Agreement. This document is an express trust signed by both the trustee and the beneficiary. It sets out how the trustee will manage the legal interest on behalf of the beneficiaries. A breach of the agreement is a grievous kind of contractual breach and the breaching trustee usually faces significant liability.
- Deed of Trust. It is an agreement between a lender and a borrower to give the property to a neutral third party, called a trustee. The trustee holds the legal title to the property until the borrower settles the debt.