Family Trust? Key People

Creating a trust to anchor an estate plan can accomplish so much. A trust can hold assets for the care of the older generation (who perhaps set it up), as well as designate funds for one spouse upon the death of the other. Children, grandchildren, pets, and charities can all be the ultimate beneficiaries of remaining assets. With so many good intentions at stake, it’s important to understand the players involved in a trust, as well as their roles. 

Who Is Involved In a Trust? Roles Explained

At its most basic, a trust is established when assets are legally transferred from the person who owns them (the grantor or settler of the trust) to the trust, to be safeguarded and distributed based on the instructions detailed in the trust agreement. As estate planning experts at Leigh Hilton at PLLC observe, the legal terms involved in a trust can be off-putting, so it’s useful to keep in mind that simply put: “Every Trust comes down to three roles: someone who creates it, someone who manages it, and someone who benefits from it.” Here’s a basic overview of the roles played by the trustor, trustee and beneficiaries of a trust:

The Trustor

This is the person who originally set up the Living Trust. This person can be called many things… including “Trust Maker,” “Trustor,” “Settlor,” or “Grantor.”…Often, a joint Trust is set up for a husband and wife, with both serving as Trustors.

The Trustee

A Trustee is the manager of the Trust. When a Living Trust is set up, the Trustor(s) usually serve as the initial Trustee(s).  Once the initial Trustee(s) die, then the “Successor Trustee”…takes over … .Trustees may be either individuals or professional organizations … .These individuals have a fiduciary responsibility to manage the Trust according to the Trustor’s wishes.

The Beneficiary

…The third party (or parties) to a Trust are the people who will inherit….Beneficiaries can fall into several categories:

• The “primary”…beneficiary, to whom distributions may be presently made by the Trustee
• The “secondary” (or “contingent”) beneficiaries, who replace the primary beneficiary when he or she passes away
• The “remainder” beneficiaries, who inherit only when all of the above-named beneficiaries are deceased.

Though there are discrete tasks involved in being a trustor, trustee and beneficiary, the same person can take on multiple roles. In fact, this is quite common when family trusts are established, as Nikki Nelson of Wolters Kluwer illustrates:

• • A husband and wife could, as co-grantors, transfer property to a trust with themselves as co-trustees, with the husband and wife both as life beneficiaries, and perhaps with their children as contingent beneficiaries of the remainder interest.
    • Further, a single trust instrument can establish multiple trusts. For example, the previously mentioned trust could provide that, upon the death of the husband and wife, individual trusts would be established for each child. Again, one person may assume all three roles in the trust.

Understanding The Trustee Role and Trustee Bonds

When trusts are established, trustees are named to administer the assets in them, based on the arrangements specified in the trust agreement. Trustees have fiduciary obligations and are held to exceptionally high legal standards,“the most important of which are the duties of loyalty and care, and the duty to act in accordance with the terms of the trust agreement.”  

Given the seriousness of the role, trustee bonds can be required. Essentially, a trustee bond is a specific type of fiduciary bond that protects the interests of the trust and its beneficiaries in accordance with applicable state law. As a leading national provider of many types of fiduciary bonds, Colonial Surety Company makes it easy and efficient to obtain trustee bonds: Just get a quote online, fill out the information, and enter a payment method. Then, simply print or e-file the bond from anywhere. 

Quote and Obtain Trustee Bonds Here

Good To Know: Revocable Vs Irrevocable Trust?

When a grantor establishes a trust, they can plan for their own needs as they age, and designate assets for distribution to loved ones, charitable organizations and even pets. To ensure a family trust addresses the specific circumstances and goals involved, it’s wise to speak with an attorney about whether a revocable or irrevocable trust is best:

Trusts can be revocable or irrevocable. Revocable trusts allow the grantor – the person creating and funding the trust – to change it during their lifetime….With an irrevocable trust, the grantor cannot make modifications. Assets placed in this type of trust no longer belong to the grantor. Such trusts can therefore help someone qualify for government benefits, reduce their taxable estate, and transfer wealth. The value and utility of a trust will depend on your unique circumstances as well as the type of trust you use.

Estate Law Practice? Here’s Help…

All types of fiduciary and court bonds are just a few clicks away with The Partnership Account® for Attorneys from Colonial Surety Company. Once you’ve signed up, just:

• • • Log into your private dashboard
    • Choose from our complete portfolio of fiduciary and court bonds
    • Get a quote and send it to your client for completion, or go ahead and complete it on their behalf—the choice is yours.
    • Download, print or e-file the bond. It’s that easy!

Available fiduciary bonds include: administrator, estate, probate, personal representative, trustee, conservator, guardian and more. 

Court bonds include: appeal, supersedeas, TRO, replevin and many more. 

At Colonial Surety Company, we are national and direct bond writers. Our experienced team is here to help ensure you meet even the most detailed bonding requirements.

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