David A Lewis, Esq.
Trusts: What are they?
In its simplest terms, as trust is a legal entity (like a corporation or a partnership) that has certain characteristics that make it unique.
Every trust has three parties; first, a grantor, or settlor, second, a trustee, and third, a beneficiary. Generally speaking, the grantor (or settlor) is the person setting up the trust and transferring assets into it. The trustee is the one who is taking custody and control over the assets transferred to him or her by the grantor. And lastly, the beneficiary is the one for whose benefit the trustee is holding and managing the assets in the trust.
IRAs are Trusts
A simple, and very understandable example of a trust is an IRA account. When we set up an IRA account and make contributions to it, we are fulfilling the role of the grantor. The institution with whom the IRA is set up serves as the trustee of an IRA account. Lastly, while we are alive, we are the beneficiaries of our own IRAs. After we pass away, others become beneficiaries of the IRA account as per the designations we make when we set up the account.
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