Many estate plans make use of a device that is known as the “living trust” or the “inter vivos trust” as a means of avoiding the time and expense of probate and for reducing estate tax liability. This type of trust is created during one’s lifetime and not in the face of imminent death – in fact, “inter vivos” is Latin for “between the living” – which is why the trust is also very useful for establishing a long-term property management plan. In order to create a living trust, however, certain essential elements must be present.
The trustor (also known as the settlor or trust maker) of the trust is the person that creates the trust in the first place. The trustor is usually the person that transfers property into the trust.
The trustee holds legal title to the property that is transferred into the trust for the benefit of the trust’s beneficiaries. As the trustee, he or she is charged with managing the property, making sound investments, making any disbursements to the beneficiaries, and upholding various duties. Some of these duties include the duty of loyalty, the duty to carry out the trust’s terms, and the fiduciary duty.
The beneficiary is the person for whose benefit the trust was created. There must be at least one ascertainable beneficiary for the trust to be valid.
The trust must have property that is readily identifiable, definite and ascertainable. It can be real property or personal property.
Any trust that is created for an illegal purpose, or that is against public policy, will be void.
To be valid and enforceable, a trust must meet the necessary legal requirements. The best way to assure its validity is to work with an experienced and qualified estate planning attorney.