A trust is a fiduciary relationship in which a trustor gives the trustee the right to hold title to property or assets for the benefit of a third party, the beneficiary. Trusts provide legal protection for the trustor’s assets to ensure those assets are distributed according to the wishes of the trustor. Trusts save time, reduce paperwork and can help avoid or reduce inheritance or estate taxes.

A trust can also be a type of closed-end fund established as a public limited company. Trusts are created by an individual and their lawyers, who decide how to transfer designated assets or all of their assets to trustees. These trustees hold on to the assets for the beneficiaries of the trust.

A trust is commonly used to determine how a person’s money should be managed and distributed during their lifetime and/or after their death. A trust is also a method for financially providing for a beneficiary who is underage or has a mental disability. Once the beneficiary is deemed capable of managing their assets, they will receive possession of the trust.

A trust helps avoid taxes and probate, protects assets from creditors, and dictates the terms of an inheritance for beneficiaries. Trusts do require a significant time and money investment to create, and they are not easy to revoke or dissolve. Trusts are very flexible, and the rules of a trust depend on the terms on which it was established based on the needs of the solicitor.