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What is a Trust?

You may hear people talking about how they set up a trust for their children or they set up a trust as part of their estate plan; but you may be wondering, what exactly is a trust and how does it work?

When someone owns an asset, for instance stocks, they own both 1) the legal title to the asset and 2) the beneficial use of the asset. The beneficial use means they receive the income that the stocks generate. Sometimes, the owner wants to give the legal title of the asset to one person but give the beneficial use of the asset to another person. For instance, if the owner has a minor child, he may want to give the legal title to someone who is not a minor to hold it on behalf of the minor child; but have the minor child receive the income generated by the asset. This is when a trust may be used.

A trust can be visualized as a bucket. The bucket can hold assets like stocks. The purpose of the bucket is divide the legal title from the beneficial use and give the legal title to one person and the beneficial use of the asset to another person.

A trust generally has three participants. The first participant is the Settlor. The Settlor is the person who owns the stocks and sets up the trust. The second participant is the Trustee. The Trustee is the person who the Settlor gives legal title to stocks in order to put them in the bucket (the trust) on behalf of the third participant, the Beneficiary. The Beneficiary is the person who receives the benefit, the income generated by the stocks, that the Trustee is holding in the bucket (the trust).

Trusts can be useful and appropriate in many situations and can range from simple to complex, but they are all based on this concept that property is put in a trust (the bucket) so that the legal title can be separated from the beneficial use.

  • Why Choose
    Our Firm?

    We limit the number of clients that we have at one time, allowing us to focus on your case.

    Personalized Representation
  • Know the
    Benefits

    Find out if you and your family can benefit from our elder law planning services!

    More Information
  • Dedicated & Experienced

    Our firm exclusively handles elder law concerns so your family can obtain peace of mind.

    Meet Your Attorney
  • Complimentary Consultation

    Let us help. Request your consultation today and we will be in touch.

    Contact Us Now

Contact Us

Edwards Elder Law, P.A.
St. Petersburg Elder Law Attorney
Located at: 2510 1st Ave. N.,
St. Petersburg, FL 33713
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Phone: (727) 755-5808
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Disclaimer

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.