What Exactly Is A Trust?
A Trust is a legal document that specifies how your assets will be distributed to your beneficiaries, at a certain time, generally once you pass.
There are several different types of Trusts; however, the Trust most commonly referred to is known as a Revocable Living Trust. This type of trust is one created by you (and your spouse if desired and depending up the state you live in) during your lifetime, and can be changed, updated or terminated by you during your lifetime. This means you can set it up, change it as many times as you like, or get rid of it – whatever you choose. It becomes irrevocable – meaning you can no longer update, change or terminate it, upon your death.
Still not clear? Think of a Trust like a big shoebox. It's your box and holds all of your valuables (metaphorically). You control your “box” and you can swap it out for a bigger or smaller box, decide who controls the box and/or who gets the stuff that is in the box while you are alive and/or after you are deceased. You have full control of the box and what goes in and out of it. You can put your house in the box (well, let’s say the title to your house for visual ease), your jewelry, your cars, your favorite paintings, etc. While there are some rules and limitations, you get to decide what box you hold, who controls it if you can’t, what is inside of your box and who gets to take what you have put inside your box when you are gone.
The point of the metaphor is to highlight the fact that for a Living Trust, you retain complete control. You continue to live your life, and manage your affairs and assets the way you always have. It simply makes it easier, and more clearly defines, what occurs when you are no longer living or can no longer control your assets. Of course there are other types of trusts that can accomplish other goals, but in general, it all starts with a living trust.
To go back to the metaphor, think about what would happen to all that stuff without a box. Someone would look at your house and wonder (or argue) about who should get it, or the stuff inside of it. Someone might make a beeline for your jewelry, your clothes, your bank account. Or even if it's clear where it all goes, someone still has to go around and figure out what you have, gather it up and give it to that lucky person. Wouldn't it be nice if all that stuff was in a lovely box, organized, labeled, and easy to carry?