Trust Structure

• A valid trust requires several actors: a settlor (or grantor, in some states), who transfers assets into the trust; a trustee, who manages and administers those assets; and a beneficiary, who reaps all benefits from the assets and may occasionally receive distributions from the trustee.
  
  

Execution

• The formalities necessary to create a trust vary under different states' laws. However, most states require a written trust agreement signed by the settlor.
  
  

Res

• A valid trust must have a res. "Res" is the legal term for existing, defined assets that will be placed in the trust. However, some states now allow the "pour-over will," in which the trust remains unfunded until the settlor dies, at which time the settlor's will grants assets to the trust.
  
  

Uses of Trusts

• Because a trust begins operating during a settlor's life, trusts generally avoid having to go through the probate process---making them a useful estate planning tool. Some types of trusts allow the settlor to insulate his assets from creditors or to plan for mental incapacity.