In healthy relationships, people trust that parents and romantic partners will show love, that business partners will honor their agreements, and that those in positions of authority will use power responsibly. People also trust complete strangers—doctors, taxi drivers and first-time babysitters, for example—to follow social norms and not take advantage of them or their loved ones. Trust is a powerful emotion that’s important for forming strong, long-lasting connections.
Trust is a complex mental process that binds representations of self, other, and situation into a special pattern of neural firing called a “semantic pointer.” This is what’s responsible for the feeling we call trust. Trust, like other emotions, can be triggered by cognitive appraisals of situations and their relevance to our goals, perceptions of physiological changes, and representations of ourselves experiencing the emotion.
People use trusts for a variety of reasons, from protecting privacy to avoiding probate and reducing administration costs after death. The type of trust used depends on your individual needs and should be carefully reviewed with your estate planning attorney.
A trust is an arrangement in which assets are transferred from a person (the “grantor”) to a trustee who holds and manages the property for the benefit of one or more beneficiaries. When someone creates a trust, they typically work with an attorney to write a legal document that outlines their wishes for the distribution of specific assets. This legal document transfers ownership of the assets from their name to the trustee’s name (if it’s real property, this usually means a deed; if it’s bank accounts, it may involve changing the name on the account).
Once the trust is established, the trustee must administer the assets according to the terms set forth in the trust document. This can include distributing income and/or principal to the beneficiary(ies).
The duties of a trustee are complex and may be governed by state law as well as the provisions of the trust document. The trustee must provide a full accounting to the beneficiary(ies) and maintain records of all transactions. The trustee must report to the beneficiaries on an annual basis and must notify them of any changes in tax laws that affect trusts. The trustee must also file the annual trust tax return and pay any taxes due.
The cost of creating a trust can vary, depending on how much the grantor owns, the complexity of the documents, and the type of assets that are transferred. However, some attorneys offer a budget-friendly route to drafting the necessary paperwork. Others offer a comprehensive set of services that can be customized to meet your individual goals. There are also a number of online resources that can help you draft a simple trust for no cost. In addition, the website FreeWill provides a way to make a basic trust for no charge. However, it is always best to speak with your trusted advisor before making any decisions about the structure of a trust or which type of trust to use.