Understanding the Three Roles in a Trust

millman law group three roles in a trust

Learn more about the three roles in a trust.

A living trust can be an excellent estate planning tool. However, if you are new to estate planning and aren’t quite sure what each role in a trust means, it’s essential to understand. The distinct roles in a trust are the grantor/settlor, trustee, and beneficiary. These three people are necessary for a trust agreement, which is created with your estate planning attorney. Trusts are an effective way to manage assets during a person’s lifetime and distribute them after their death while avoiding probate. Probate can take well over a year to complete, so a living trust can be an excellent estate planning tool. Assets like property, investments, and bank accounts can be held in a trust. What role does each person play in ensuring the trust is used appropriately? 

The Grantor/Settlor

The critical role in any trust is the person who creates the trust. Depending on where you live, this person may be called the grantor or settlor. This is the most important of the three roles in a trust because this person creates the trust, decides how it will operate, and funds it with their assets. 

The Trustee

The trustee plays a crucial role in managing a trust. This person is in charge of running the trust and taking care of the trust assets. For example, this may include making sound investments and making distributions to beneficiaries. 

The trustee (or successor trustee) will also administer the trust after the grantor’s death. The trustee may be entitled to a fee for their services, but the trustee does not receive any of the property or assets in the trust. 

The Beneficiaries 

The beneficiaries, or beneficiary if there is only one, benefit from the creation of the trust because they receive the income or property in the trust. They will receive these assets per the instructions written down in the trust agreement by the settlor. 

Can Someone Have More Than One Role? 

Can the same person fill any of the three roles in a trust? The answer is that, so long as a person is living and not incapacitated, they can hold more than one role in a trust. For example, you can hold all three roles when you institute a living trust as part of your estate plan. You can make the trust, be the trustee who invests and manages the trust assets while you live, and be the beneficiary of those assets simultaneously. 

When you die or become incapacitated, you can no longer operate the trust as a trustee. At the time of death or incapacitation, a successor trustee must take over the administration of the trust. 

How Are Trust Assets Distributed? 

When you die, the trustee or successor trustee must pay all claims against your estate and taxes. The trustee must distribute all assets to the beneficiaries as outlined in the original agreement. An estate planning attorney can also help you manage the distribution of assets and can work as a trustee if you wish to choose someone without personal connections to the assets. 

Estate Planning Made Easy With Millman Law Group

Millman Law Group, PLLC is rare because it’s one of the only law firms that offer life planning in South Florida. From life care planning to the preparation of detailed estate plans, Millman Law Group has committed to serving Floridian elderly communities in Boca Raton, Palm Beach County, Ocean Ridge, Hillsboro Beach, and many other areas since 2018. Our dedicated team also specializes in special needs Trusts and catering to any age demographic because we know for certain it’s never too early to start preparing you and your family for your future. For the latest news in estate planning and elder care law, follow us on Facebook, Twitter, Linked In, and Pinterest. You can also contact us at 561-463-6480.