A trust is a document which develops a three-party fiduciary relationship involving the transfer of property into a trust for the benefit of another. The three parties involved are the Guarantor, Trustee, and Beneficiary. The Guarantor is the party transferring the assets into the trust. The Trustee is the party tasked with managing the assets in the best interest of the beneficiary. And the beneficiary is the party who receives the advantages of the trust’s assets.

In the operation of a trust, the Trustee enters a fiduciary relationship with the Guarantor and the Beneficiary. A fiduciary is a legal duty placed on the Trustee to manage the trust’s assets in the best interest of the Beneficiary. Acting in a fiduciary capacity the Trustee is held to a high standard of honesty and full disclosure to the other parties in the trust. Failure to or breach of the Trustee’s fiduciary duties can result in the Trustee being held legally responsible for damages to the trust’s assets.

Trust do not fit every estate plan. Benefits of having a trust include protecting the beneficiary from poor judgement or wasteful spending, protecting assets from creditors, managing assets that are not divided easily (such as real estate or mineral interests), provide for charitable giving, proving succession planning for a business, avoiding probate, and much more. However, trusts also have their drawbacks. Cons to having a trust include the costs associated with administering the trust (compensation to the Trustee, cost associated with asset transfers, and filing taxes annually). After a comprehensive review of your assets and goals the Maguire Law Firm will help determine if a trust is right for you.