A trust is a fiduciary relationship in which a grantor (or settlor) transfers legal title of assets to a trustee to hold, manage, and distribute for the benefit of one or more beneficiaries. Unlike corporate entities or partnerships, trusts are not designed for business operations, but to manage and preserve wealth across generations.
The core mechanics of a trust include:
The trustee is legally bound to administer the trust solely in the interest of the beneficiaries, adhering to a high standard of loyalty and care.
Assets transferred to the trust during the grantor’s life are owned by the trust, not the grantor, and therefore bypass probate court upon the grantor’s death.
The grantor can establish specific terms for how and when assets are distributed, preventing immediate access by financially immature or vulnerable heirs.