A trust is a legal entity that is central to a three-part agreement in which an individual the trusts "grantor" transfers the legal title to an asset to that trust for the purpose of benefiting one or more beneficiaries. The trust is managed by one or more trustees. Trusts may be revocable or irrevocable and are sometimes included as part of a will.
The trusts grantor names a trustee to handle investments and manage trust assets. The grantor can work with the trustee on major decisions, or the trustee can be assigned full authority to act on the grantors behalf. Trustees have a responsibility -- known as "fiduciary responsibility" -- to act in the grantors best interest. In some cases, the grantor may serve as trustee.
Although trusts can be used in many ways for estate and financial planning, they are most commonly used to control assets and provide financial security for both the grantor and the beneficiaries; provide for beneficiaries who are minors or require expert assistance managing money; avoid estate or income taxes; provide expert management of estates; avoid probate expenses; maintain privacy; and protect real estate holdings or a business.
Your qualified legal professional can help you evaluate if a trust may be appropriate for your situation.