A trust is a legal arrangement by which an owner of property transfers legal ownership of property to a person or entity called a trustee. The trustee holds the legal ownership of the property for the benefit of the beneficiaries. The trustee manages and safeguards the property in order to provide income or other benefits to the beneficiary or beneficiaries. The person who creates the trust is called a "Trustor" or "Settlor." The persons or entities who receive the benefits are called the "Beneficiaries."
There are many types of trusts, but the probate court usually works with four basic types: testamentary trusts, living trusts (also known as "inter vivos trusts"), wrongful death trusts, and special needs trusts.
A Testamentary Trust is created in a Last Will and Testament, and comes into existence after a person's death. A testamentary trust is funded with assets after the person's death. A person who makes a Last Will and Testament containing a testamentary trust is called a "Testator." A Testator may dictate by the terms of his/her Last Will and Testament that upon his/her death, certain property must be conveyed to a trustee for the benefit of the beneficiaries as the trust directs. The Probate Court usually is involved in overseeing the operations and transactions of a testamentary trust.
Inter-vivos is Latin for "during life." Often these trusts are referred to as "Living Trusts." A Living Trust is one that was created and funded during a person's life; that is, to distinguish it from a Testamentary Trust which only comes into being upon the death of the Testator. These types of trusts are frequently used to avoid the need for transferring property through the Probate Court.
Wrongful Death Trusts
When a person under twenty-five years of age is to receive money from a wrongful death legal action, the Probate Court may order that the funds be held in trust in order to preserve the funds and to allow the Court to administer the fund until the beneficiary is ready to receive the full amount.
Special Needs Trusts
Special Needs Trusts are often established to supplement the life of a person with disabilities by placing assets in an account that may be used for the disabled person's benefit. This area of law is highly regulated, and if you are considering a special needs trust, the Court strongly encourages you to contact an attorney skilled in drafting Special Needs Trusts.