What is a Trust and How Does it Work?

A Trust is a vehicle whereby one person or entity holds and manages property for the benefit of another. The person or entity that holds the legal property interest is called the “Trustee.” The person for whom the property is being held is called the “beneficiary” and the person establishing the trust is called the “grantor.” A Trust can take one of two forms: Revocable or Irrevocable. Revocable Trusts may be changed or terminated by the grantor (also called the “settlor”) during his or her lifetime. An Irrevocable Trust, once established, cannot be terminated or altered. Revocable and Irrevocable Trusts that are established during the grantor’s life are called Inter Vivos Trusts. A Trust created in a Will and designed to go into effect upon the testator’s death is called a Testamentary Trust. Once formed, and upon enactment, Trusts allow the Trustee to direct or control the assets held in the Trust in the manner dictated by trust language using the discretion of the Trustee allowed by trust. Trustees have a legal duty, referred to as a fiduciary duty, to make decisions, and act in good faith, regarding the Trust property. Most often, Trustees are given wide and sweeping power to handle trust assets.

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Garg & Associates, PC | 21 Waterway Avenue, Suite 300 | The Woodlands, Texas 77380 Please call 281-362-2865 | Fax: 866-743-4506
Serving The Woodlands, Spring, Houston, Conroe, Kingwood, Tomball, Cypress, Huntsville, Cleveland, Stafford, Montgomery County, Harris County, West Oaks, Memorial, Sugar
Land, River Oaks, Alief, Stafford, Missouri City, and Southwest Houston Texas.