What is a trust?

What is a trust?

I love the question, “What is the trust?” because I know that most people think of a piece of paper when they think of a trust. A trust is not a piece of paper at all. In fact, I’d be willing to bet that you’ve created a trust yourself.

If you give your friend $20 and say, pay for my meal, whatever change there is, leave it as a tip or give me the change later. That’s a trust. That’s it. You’ve given your money to someone else.

They, as the trustee of your verbal trust, are going to take that money and pay for your meal and according to your instructions, and then they’re going to use the rest of the money for the tip or keep it, or whatever you instructed them.

In a larger context, in the context of estate planning, the trust is simply a document that’s going to be more complicated because it’s going to be instructing for all of your assets. For how to manage those assets while you’re living and competent. If you become incompetent at that point and at your death. It’s kind of like the original corporation. So a trust doesn’t go through probate because a corporation doesn’t die when the CEO or owner of the corporation dies. Similarly, a trust won’t go through probate, and it will give instructions for managing your assets throughout your life at all the stages I discussed.