What is a Trust?

by | May 6, 2020 | Estate Planning |

In simple terms a trust is three party arrangement between a Trustee, a Beneficiary and a Grantor, where one party holds property for the benefit of another party. The party who holds the property is the Trustee, and the party who benefits from the property being held is the beneficiary.  The Grantor is the person who gives the property to the Trustee to be held for the benefit of the beneficiary. A trust can be implied, meaning there is no written trust document, or it can be explicit when there is a written trust document.  When a trust is being used for estate planning it should always involve a written trust document.

The most common type of trust used for estate planning is a revocable living trust.  As the name implies, a revocable living trust can be revoked (terminated) or changed at any time by the grantor.  It is considered a “living trust” because is established while you are living, as opposed to a testamentary trust that is created when you die.

A revocable living is created by signing a written trust document during your lifetime, with you serving in all three roles: grantor, the trustee and beneficiary. Serving in all three roles ensures that during your lifetime you have complete and total control of the assets you transfer to the trust.

There are generally three phases covered in the revocable living trust document.

  • The first phase is when you are a live and competent to handle your own affairs. During this first phase you are the trustee and beneficiary of the trust, which means you have full authority over the trust property and receive all the benefits of the trust property.


  • The second phase of the trust is when you are a live, but unable to manage your own affairs. During this second phase an individual you have named in the trust document would take over as trustee, but you would still receive all the benefits of the trust property as the beneficiary.


  • The third and final phase of the trust is after you pass away and the trustee you have named in the trust document takes over management of the trust and then manages and distributes the trust property to your family and loved ones at stated in the trust document.


There are many benefits of establishing a revocable living trust, including avoiding probate, maintaining privacy and controlling how and when your beneficiaries receive their inheritance. However, none of these benefits will be achieved if your trust is not funded.  A trust is funded when ownership of your assets is transferred to your trust during your lifetime and any items with beneficiary designations are updated to be payable to the trust upon your death.

There are other types of trust used in estate planning.  Irrevocable trusts (trusts that cannot be changed) are used for asset protection planning and Medicaid Planning, while Charitable Trusts can help you maximize the benefits of charitable giving.

Everyone has options when it comes to their estate planning and establishing a trust. Trust and estate planning law can be complex, but with the help of an experience estate planning attorney you can create a plan that meets your goals and protects your family.

Paul Kellogg is an attorney in Cincinnati with the Phillips Law Firm, Inc. Paul’s practice focuses on providing comprehensive estate planning and probate services to families and business owners, as well as serving as outside general counsel to entrepreneurs, real estate investors and businesses where he provides guidance and advice on a wide variety of transactions and disputes.  He can be reached at (513) 985-2500 or via email at [email protected] Please explore Paul’s other articles on estate planning, real estate and business on the Phillips Law Firm Blog page

The article is for educational and informational purposes only and does not constitute legal advice. Anyone contemplating taking legal action is urged to obtain proper legal advice from an attorney licensed in your particular jurisdiction.