Trust – a legal relationship with respect to the property where one party (the trustee) holds the property with the legal duty to manage it for the benefit of another (the beneficiary). The key distinction is that the trustee holds title to the property, but the beneficiaries are the true owners. The person who creates the trust is called the grantor, settlor, or trustor. The persons who eventually receive the principal of the trust are called the remaindermen.

Types of Trusts

There is no shortage of jargon describing the types of trusts, e.g. Bypass, Credit Shelter, Charitable Remainder, Charitable Lead, Marital, Non-Marital, Crummey, Life Insurance, Medicaid Qualifying, GRIT, etc. It is more important to understand the purpose and intention of the trust than to focus on the jargon. The important questions to ask are:

What is the purpose or objective of this Trust?

What is the grantor trying to accomplish by use of this Trust?

A testamentary trust is one that is created in a Will and is a part of the Will document. It does not come into existence until the person passes away. A living trust (AKA inter vivos trust) is one created in a separate trust document and is in existence during the life of the grantor. In general, most estate plans can use either a testamentary or living trust.

2. A Different Way to Own Your Property

A Trust is just a different way to own property. Most of us think of “ownership” as a simple matter of our absolute possession and control of a particular property. However, you are not the sole and absolute owner of many things that you think you own.

For example, if you own a house with a mortgage, the bank has certain rights in your house and you owe legal obligations to the bank. If you don’t make your mortgage payment, the bank can foreclose and evict you. If you damage or decide to not maintain the property to the extent that you diminish the property value, the bank can also foreclose. Even if you have no mortgage, the government has a right to take your house away from you for any public purpose (e.g. building a road). This is called the right of eminent domain. If your activities on your property (e.g., a pig farm) interfere with your neighbors enjoyment of their property, they may sue you on the grounds you are creating a “nuisance.” Thus, our ownership always includes certain obligations toward others who have certain rights on property that we “own”.

Some people choose to lease a car rather than to own it. The lease gives them the right to drive the car, park it in their driveway and, in general, use it just as if they owned it. Thus, they obtain the same benefits and rights as with ownership.


Long-term care and custodial care are terms referring to assistance to a person for their daily living requirements such as dressing, walking, bathing, eating and taking medications. Trained medical personnel are, by definition, not required for such care.

Medicare is a federal health insurance program primarily for the elderly (age 65 and over). Medicaid is a federal and state health insurance program for specified groups of people meeting financial and other criteria for eligibility. Medicare does not pay for custodial care. Medigap and Medicare supplemental insurance and most private medical insurance also do not cover custodial care.



a) Attorneys fees for setting up a trust will generally be lower than fees for probate.

b) The privacy of your estate will be preserved by using a living trust. The probate inventory is a public record open to inspection by anyone.

c) Avoiding the delay of probate and immediate distribution of the estate are commonly expressed advantages. However, the trustee cannot distribute the whole estate to the heirs until estate taxes and all other debts are paid. If the trustee does so, he/she will be personally liable to pay these debts out of their own funds. However, the lack of time constraints and probate requirements will certainly be avoided and the trustee in most cases will be able to complete the administration much sooner and with less work.

d) The cost of an executor’s fee may be avoided if an executor would have been appointed who would have charged a fee. In most situations, an heir or family member can be appointed executor on the condition that he/she serves without compensation.

e) A guardianship proceeding in Probate Court may also be avoided. However, an inexpensive power of attorney may also accomplish this same objective.

f) Avoidance of estate taxes is often implied as an advantage of a living trust. Although a living trust can be part of an estate plan that eliminates estate tax, this can also be accomplished with a will. Therefore, estate tax savings is clearly not an advantage of a living trust.


a) There will be present costs to create the trust and transfer costs for putting the assets into the trust.

b) There may be additional complications and requirements associated with everyday transactions once you have transferred title to all your assets into the trust. Banks, stock brokerage companies etc. may require various forms to be filled out, a copy of the trust and other assurances that the trustee is authorized to take certain actions. However, living trusts have become more commonplace in recent years and most companies can now handle trusts without too much complication.

c) Upon death, the transfer to the heirs is not automatic. Various legal documents will be needed to fulfill legal requirements.

e) The trustee is not accountable to a court and the supervision of the Probate Court is not available. Some of the functions of probate are for the executor to report to the court all receipts and disbursements, an accurate appraisal of assets, payment of bills and distribution to the heirs. If the executor misapplied some money or did not distribute according to the Will, the court would probably be aware of this and take action against the executor. A trustee of a living trust is typically not accountable in this fashion and the heirs may have no way of knowing if estate funds were misappropriated. Of course, the trust beneficiaries have a right to sue, but this will be more costly and involved as opposed to filing an appropriate motion in Probate Court.