Trusts vary greatly in their design and purpose. But all trusts do share some similarities. For example, each trust has three main roles in it: trustor, trustee and beneficiary. In today's post, we'll go over what each of these roles means.
What is a trustor?
This is the person who creates a trust and uses his or her property to fund it. So, if you have created and funded a trust, you are typically its trustor. This role is sometimes also referred to as grantor.
Trustors have many choices on what terms to include in trusts they create. Once a trust is formed, how much discretion a trustor has to change its term depends on the type of trust he or she has set up. A revocable trust can be changed, while an irrevocable one typically can't.
What is a trustee?
This is the person charged with managing and distributing the property used to fund the trust.
A trustor could pick a single trustee or multiple co-trustees. He or she also could choose to be the trustee of his or her own trust.
How much discretion a trustee has depends on the terms of a trust. While the trustee role is limited by a trust's terms, it generally is quite powerful. So, it can be important for a trustor to think carefully about who to select as a trustee.
What is a beneficiary?
This is the person the property in a trust is to benefit.
A trust could have a single beneficiary or multiple beneficiaries. A trustor also could set himself or herself as a beneficiary. What particular rights a given beneficiary has, and what benefits he or she is to receive under the trust, are yet another set of things that depend on a trust's terms.