What is a Trust?

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One way that a private landowner can transfer their property to others is through a trust. A trust allows you to maintain control over the property you wish to distribute to others, even after you pass, and can help minimize gift and estate taxes.

A trust can transfer your property when you are alive, known as an inter vivos trust, or upon your death, a testamentary trust.  To form a trust there must be a settlor, someone who places property in the trust, beneficiaries, people who receive benefits from the trust, a trustee, someone who administers the trust, and trust property, which is known as res.

There are a variety of different kinds of trusts that have different requirements, are formed for different purposes, and have different impacts on income, gift, and estate taxes.  Some of the common trusts used in estate planning are grantor trusts, charitable remainder trusts (CRTs), and grantor retained annuity trusts (GRATs).