Trusts are legal documents steeped in mystery. Most people have heard of them but few people understand what they are and what they can do. Actually, a trust is merely a written set of instructions on how property owned by the trust may be used. Like people, trusts come in many different types. All trusts have three important roles in common. The first is the person who creates the trust, known as the grantor. The grantor states the rules under which the trust property may be used. The trustee is the person who administers the property according to the rules the grantor set up. The last important role is the beneficiary. The beneficiary is the person who gets to use property in the trust or benefit from the property in the trust. Beyond these three roles almost every trust is different depending upon the reason the grantor is creating the trust. For example, many families create revocable living trusts for the purpose of avoiding probate, minimizing estate taxes, and keeping family assets private. With a revocable living trust during the lifetime of the grantor, the grantor acts as grantor, trustee and beneficiary. The grantor is free to do whatever the grantor wishes with the trust property. After the grantor dies, a new trustee takes over and must follow the rules the grantor laid out. The property now must be used for the benefit of the beneficiaries who may or may not include the trustee. If the family desires to minimize estate taxes then certain articles must be included in the trust to accomplish that goal. If a grantor wants to make sure that a beneficiary receives $2,000 a month then the grantor includes an article stating this. The biggest mistake that most people make in creating a revocable living trust is not re-titling real estate, bank accounts, brokerage accounts and insurance death beneficiaries into the name of the trust. If assets are not re-titled into the name of the trust then when the grantor dies, usually the property may have to go through probate to get into the trust. If one of the goals in creating the trust is to avoid probate then this goal will not be reached unless assets are in the trust at the time of the grantor's death. Another type of trust is an irrevocable trust. Irrevocable generally means that the grantor cannot demand that the property in the trust be returned to the grantor. However, even the grantor of an irrevocable trust can reserve the right to change certain things about the trust. For example, it is not unusual for the grantor to reserve the right to change the trustee of the trust and/or the right to change who receives the property (beneficiaries) after the grantor dies. Irrevocable trusts are used for many different purposes. In our practice, we create irrevocable trusts to hold money to be used for grandchildren's education. We create irrevocable trusts to protect assets from creditors. We use irrevocable trusts to protect homes from Medicaid liens. Like all trusts, the irrevocable trust must set out rules for the use of the property that accomplishes the goal the grantor created the trust for. Another terrific use of a trust is to hold property for the benefit of a disabled person. This type of trust is known as a special needs trust. It is designed so that a person receiving government benefits will not be disqualified from those benefits because the person receives an inheritance. If the inheritance is left to a special needs trust for the benefit of the disabled person, then usually the person would not lose benefits. This is a great way to provide a nest egg for a loved one and not have to cut them out of your estate plan. ©Surprenant & Beneski, P.C. 35 Arnold Street, New Bedford, MA 02740, 336 South Street, Hyannis MA 02601 and 45 Bristol Drive, Easton, MA 02375. This article is for illustration purposes only. This handout does not constitute legal advice. There is no attorney/client relationship created with Surprenant & Beneski, P.C. by this article. DO NOT make decisions based upon information in this handout. Every family is unique and legal advice can only be given after an individual consultation with an elder law attorney. Any decisions made without proper legal advice may cause significant legal and financial problems.