A trust is an entity that is equally separate and apart from the individual that is establishing it. A trust is also a separate entity for tax purposes. A trust is created when a grantor transfers property to a trustee for the benefit of another person. The trustee is responsible for managing the property for the beneficiary and distributing income and principal under the terms of the trust instrument. A trustee may be given explicit instructions or may be given broad discretion to make distributions.
There are a number of different trusts that that can be used in estate planning to accomplish your specific objectives. Properly structured, a trust can help you to reduce or avoid many of the fees and taxes that will be imposed upon your death.
Characteristics of a typical trust include: