Trust law is a type of lawful relationship in which a settler hands over the assets and its due control to a trustee in which a person known as the beneficiary is benefitted. Trusts are generally of two types:
- Public Trust- A public trust is created for the benefit of a community. It is created based on religious or charitable grounds. Here a normal deed is required to continue the legal proceedings.
- Private Trust- The private or personal trust is created amongst a particular family where the beneficiary is the heir and the settler is the parent along with a third-party involvement who acts as the trustee.
Advantages of Creating a Trust
- It might help in covering the cost of education, medical expenses, and other personal needs.
- Lost money or loans can be repaid using the trust amount.
- The collective wealth is safe and protected.
How Does a Trust Function?
When a trust is created, a settler who is the property owner conveys their property to a beneficiary for their benefit who maybe their children. In this case, someone is appointed as the trustee (usually an advocate) to this trust agreement who looks after the assets to be transferred and works like a manager as well as a caretaker. The trustee also makes sure that the wealth is safely transferred to the beneficiary without any hindrances. A private trust can be further categorized into two types:
- Revocable Trust- In this type of trust, the parameters can be revoked as well as changed according to the settler’s wish. The settler may wish to change the beneficiaries as well as the trustee. They are also allowed to change the amount of wealth transferred. They can specify if they can still have a share of the wealth after the transfer is done.
- Irrevocable Trust- In an irrevocable trust, the settler is no more the owner or any sort of stakeholder in the wealth transferred. Here, the trustee appointed is the sole owner of the property on behalf of the people assigned as beneficiaries. After the transfer is done, the settler under no circumstances can legally claim any part of the property from the beneficiaries.
Litvack Dessureault LLP provides lawyers who can act as honest, experienced, and highly trusted trustee for those settlers who wish to transfer their wealth to the beneficiaries due to various reasons through the medium of a private trust.