Living Trusts The Cast of Characters

One of the most useful, flexible and cost-effective legal devices available is the Revocable Living Trust. If properly drafted and funded, a trust can enable us to avoid probate and perhaps save hundreds of thousands of dollars of federal estate tax. Its successful implementation depends on the human factor, the people who are involved in the creation and administration of the trust.

The cast of characters identified in a typical living trust agreement include the following:
1. The Trustor (also known as Grantor or Settlor) is the person whose property is being placed in the trust.
2. The Trustee receives the property, holds it on behalf of the Trustor, administers and distributes the property as the Trust Agreement directs. A Successor Trustee is one named to perform these duties if the original Trustee is unwilling or becomes unable to serve.
3. The beneficiary receives distributions from the Trust. A Contingent Beneficiary is one who receives such benefits if a named beneficiary dies or is otherwise disqualified before becoming entitled to receive his or her trust share.
Often, one person mentioned in a trust wears several “hats”: Typically, the Trustor will enjoy all the benefits of the Trust, as a beneficiary, during his lifetime. The Trustor may also serve as the original Trustee. A Successor Trustee is often a beneficiary, as well.
The careful selection of the Trustee or Successor Trustee is of particular importance. Ideally, the Trustee should be someone who knows the Trustor, understands and appreciates the Trustor’s goals, values and philosophies of investment and disposition. The Trustee serves in a fiduciary capacity, meaning that the Trustee must behave with scrupulous good faith and candor toward the Trustor.
Jerry Kessler practices law in Santa Clarita. He may be reached at 661-255-1001.