What are Trust Assets?
Trust assets are those assets- including property, money, or other tangible and intangible goods that are held in a trust. A trust is a formal legal document that mandates the use of a specified asset by a particular individual or group. The person establishing the trust may maintain control over the trust assets, which ends at a certain point- often at his or her death- or may relinquish control to the trust entirely.
A trust is formed to provide a method of split ownership and to protect assets. For example, assets in a trust can pass seamlessly at death without going through the probate court. If an asset is wholly owned by a trust, and the trusts' name is on the deed, that asset may not be accessible to creditor's in bankruptcy unless the trust itself goes bankrupt.
When a person establishes a trust, they must establish a trustee and a beneficiary. The trustee is the person who oversees the management of the trust assets. This trustee distributes the assets to the beneficiaries at the appropriate times, and cares for the assets while they are in the trust. The trustee has a fiduciary duty to maintain the trust assets appropriately, which means they cannot take them and use them for their own purposes, or behave irresponsibly and squander the trust assets.
One or more beneficiaries can be named to control trust assets. For example, a person could set up a joint trust for himself and his spouse. Both he and his spouse are the beneficiaries of the trust, and are entitled to the control and use of the assets that are held in the trust. However, neither he nor his spouse fully own the trust assets- the trust itself does this.
Numerous types of trusts exist. Living trusts, irrevocable trusts, and marital trusts are all different types of trusts. Any of these types of trusts can hold the same type of assets; the differences lie in who the beneficiaries are, and how and when the assets are distributed.
Conditions can also be placed on the disbursement of assets within the trust. For example, it is common for people to set up a trust in which the assets are distributed when a person reaches a certain age, or accomplishes certain milestones. The trustee is responsible and has control over the assets until the age is reached, or the person accomplishes the milestone, at which point the beneficiary of the trust is given complete control over the assets. This is often done when a valuable asset is bequeathed to a child, who is not yet mature enough to properly manage the asset alone.
Any type of tangible or intangible items can be placed in a trust. Money, stocks, real estate, bonds, patents, intellectual property rights, and other such items can all be placed in trust. The key to putting an asset into a trust is to follow the formal legal process of setting up the trust itself.
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