A trust is an agreement creating a legal entity that can own property. Trust agreements are private documents. They are generally not filed with a court or other public entity.
Q. How do you create a trust?
A. There is no specific form used to create a trust. In general, a trust is made when:
- The trust document is signed by the person making the trust, called “the Settlor”; and
- the trustee changes the title on property being held as an individual to a title held in the name of the trustee.
Once the trust is made, the agreement may be amended and/or revoked, usually only by the person who originated the trust, e.g., the Settlor.
The trust agreement specifies:
- The person who is in charge of managing the trust assets. This person is called the trustee. If a married couple create a trust, they may be co-trustees.
- The duties and powers of the trustee relating to how certain assets are to be held and managed. Once assets are titled in the name of the trustee, the trustee may then manage the assets based on the powers described in the trust agreement.
- The beneficiaries and the conditions on which the trustee is to distribute certain assets and certain parts of assets (i.e. income and principal).
- The name of the successor trustee. The successor trustee has the legal authority to take control of trust assets when the original trustee or co-trustees die or become incapacitated.