Trusts are used to set up a manner in which money or property will be distributed as a gift in life, or after the benefactor is deceased. Trusts are usually set up for family members, but they can be set up for any individual and even for an entity, such as a charity.
A settlor, or benefactor is the individual that sets up a trust and the beneficiary receives the monies from the trust as dictated by the settlor. The trustee is the person that is in charge of trusts and that person may be a legal professional or a family member. The trustee holds the property in order to benefit the beneficiary, according to the benefactors instructions.
A living trust is a trust that is set up while the benefactor is still alive. Although the trust may not be dispersed until after the benefactor passes away, it is still considered s salving trust. The trust may have restrictions as to how it will be administered, such as certain amount distributed at certain times. The money may have to be used for education or distributed at a certain age.
Trusts may also be set up after the benefactor passes away. The money, taken from the estate, is used to set up a trust fund. This trust fund may include immediate disbursements, or it may have the same restrictions as a living trust. For example, the beneficiary may begin to collect the money after they graduate college or reach a certain age.