Trusts are legal entities that will assume ownership of or own some assets after a specific triggering event. A trust involves information on how investments in the trust should be handled and distributed. There are two types of trusts based on when they take effect. If it takes effect when the Grantor is still alive, then trust is known as Living trust, and when it takes effect after the demise of a person, then it is known as Testamentary trust. So then, who owns the property in trust?
Trusts do not go through a probate process and thus remain private. Trusts will protect against certain taxations, litigation, or creditors. Every faith has four basic requirements or elements, trustee, trust property, trust documents, and known or actual beneficiaries.
Per the estate lawyer’s advice, who owns the property in trust?
The trustee owns property in the trust.
A Trustee is a legal term synonym for someone in a position of trust. It means an individual responsible with a position of trust holds and manages the property, has full authority and is required to transfer the title and all assets of ownership to the person named as the new owner in a trust instrument, also known as the beneficiary.
A trustee can do tasks with trusts, such as management and distribution. However, he does not benefit from these tasks, meaning he gains no income. Although in some cases, this might not require. To fulfill the trust terms, a trustee has to carry out the terms of the trust documents, and they must be impartial in dealing with the beneficiaries while acting in the best interest of the beneficiaries.
Trust documents
A trust document or trust deed is the legal document that defines the trust, such as the rules of operation for the faith, the powers of the trustee, the beneficiaries and their share in the income and principal, defines the settlor and appointer, and includes the instructions and wishes for the distribution of the trust property.
Beneficiaries own property in the trust.
The persons or entities that receive the assets or properties mentioned in the trust and any other benefits from the investments in the faith. The beneficiaries may be people who will either benefit from the trust immediately or eventually and can also include unborn persons like future Grandchildren.
Depending on what the Grantor specifies in the trust documents. Beneficiaries can either receive income from trust assets or receive trust assets themselves.
Trust property
It refers to assets that have been placed in a trust. It has a fiduciary relationship between a trustor and trustee for a designated beneficiary or beneficiary. Trust properties can include assets like cash, securities, real estate, life insurance policies, bank accounts, or financial investments.
With estate planning, you can pass down the trust property directly to the designated beneficiaries after a person’s death. This whole process can happen without any long probate process. It removes the tax liability in some cases and can protect your assets in case of Bankruptcy or lawsuits. Once the property has been transferred or handed down to a trust, the trust becomes the property’s rightful owner.
Owner of a property in a Trust
As a Grantor, when you set up a trust, it must satisfy four essential elements of faith, as mentioned above. First, you form a fiduciary relationship between a trustor and trustee for particularly designated beneficiaries or beneficiaries regarding the trust property.
After you draft your trust, the trustor named by you manages and handles the trust property. Even assets you transfer to the trust. After you pass your property and help to the trust, you give the ownership of those properties—support to the faith itself, which becomes the legal and rightful owner of those properties and assets.
Trusts have two basic types according to how ownership and control of properties work.
- Revocable Trust
- Irrevocable Trust
Revocable Trust
A revocable trust transfers property ownership into the trust. But the Grantor retains the power to alter, amend, or terminate the trust and its assets. Therefore, this asset does not necessarily save estate or inheritance taxes as the Grantor receives the income, with distributions of assets to beneficiaries at death.
Irrevocable Trust
An irrevocable trust cannot be altered or amended, or terminated by the Grantor once the Grantor has set it up. The property transfer is complete without retaining power over the trust or its properties.
Conclusion
This article shows what trust is. When you draft a trust with an estate planning attorney, you will own the assets or properties you transfer to the trust.
