Bite-Sized Bits of Knowledge

Hi, welcome back to another dose of bite-sized Bits of Knowledge where we give you meaningful information in a short amount of time. Today, we’re going to talk about the first of about five videos on trust administration. The videos are going to be discussing the parties, succession and transition, disclosures, trust management, and distributions. Each one will be its own video. Today, we’re going to talk about the parties, the trust parties. Who are the parties to a trust? Well, I would say this group that I’m about to tell you is pretty much the most of the parties you’re going to see. There may be some outliers, but it’s not usual, not common. To start, the creator of the trust is typically referred to as a settler or grantor or a lot of other names. Trustor, I’ve seen a lot of different ways of doing it. Every state has their own little way of doing it. In Florida, it’s a settler, but we usually typically call it a grantor. It really doesn’t matter what it’s called. The grantor is the creator. Typically, the grantor is a revocable trust. They make you a revocable trust. They could also make a grantor non-revocable trust or an irrevocable trust, which is less common but useful where needed.

Typically, the grantor is called a grantor for tax purposes, for state law purposes. It’s a terminal here, and that’s what it is. Trustees typically manage the estate, the trust for the benefit of the beneficiaries. Usually, there’s a trustee, there’s possibly a co-trustee, there’s possibly successor trustees. The trustee is the one who’s acting. The co-trustees are the multiple ones who are acting. That’s not uncommon. And successors are those who are in the bullpen. They’re waiting to act should the people who are in the capacity as trustee no longer be able to serve. Beneficiaries. So the trustee manages the assets for the benefit of the beneficiaries. Beneficiaries can be one or more of them. They could be individuals. They could be charities, tax exempt, non-tax exempt. There’s really no rules on who it can’t be, and no rules, really, on who it can be. So you’re pretty flexible in who you can designate as beneficiaries, with some exceptions in Florida and other states that you cannot disinherit, like your spouse in Florida, or minor kids and spouse with respect to your homestead. That’s the subject for another day. Another party would be a trust protector. Sometimes it’s called a trust advisor.

That’s a party that typically serves two purposes. We have a whole video on that, but typically they serve purposes of flexibility and oversight. Catch our video on trust protectors separately. They’re very useful. We highly encourage you to include them. Directed trustees is a common thing. I think they’re becoming more popular, especially in states that have self-settled asset protection trusts like South Dakota and Alaska. These are trustees that have very specific, designated or delegated duties like financial. They manage the assets, the trustee is responsible for them, but the direct to trustee is the one who manages them. It’s like an agent, almost agent principle thing. The last thing I would mention about trust parties would be a committee. Sometimes there’s committees, investment committees, business committees. It’s all about management and structure, and there’s a lot of ways to do it, especially with complicated trusts with businesses and complicated investments. Sometimes you just don’t want to have one person doing it all. If you go to South Dakota, they’re going to have you in an assortment of committees and direct to trustees, and that’s probably for asset protection purposes, if that’s the direction you want to go.

I hope you found this helpful. Thanks for stopping by and stay tuned for more. Hey, Mo. Hey,-la.