A trust comes into existence when the owner of property declares an intention that ownership of that property be held in trust for the use and benefit of a beneficiary. The person who holds title to the property in trust is called a trustee; the person or organization for whom the property is held in trust is called a beneficiary.
There are many reasons and situations that would motivate a property owner to have his/her property held in trust. For example:
- The beneficiary is believed to be a person who is not capable of managing the property held in trust for his/her benefit (e.g., a minor or a young person, or someone who is mentally incompetent).
- An owner may intend that the property be held in trust for a special purpose, such as a charitable purpose, preservation of a historical site, or to retain an environmental significant treasure.
- Avoidance of taxes may be the motivation for creating a trust. Certain types of trusts are used in planning large estates and in other situations for this purpose.
- A trust may be created to provide for the care of an animal that is alive during the settlor’s lifetime. The trust terminates upon the death of the animal or the last surviving animal if more than one animal is a beneficiary.
- A management trust may be created for a property with multiple owners (e.g., a farm or ranch land may be owned by brothers and sisters and nieces and nephews).
In most cases, a trust created by the intention of the property owner must be in writing to be enforced by the courts.
Are you interested in creating a trust? Contact us to discuss your needed and to determine your best course of action.