A lot of our clients are too damn busy to handle the day-to-day management of assets and property. They may be out of town for business reasons. Maybe they are simply not very good with up with assets and property management.
In other cases, there are legitimate health reasons. You can use a trust to control your business assets. Knowing the difference between a trustee and a beneficiary is the first step to knowing if this is an approach you should consider.
A beneficiary is the person who will be receiving the assets and property from the trust owner—also called the grantor. The beneficiary is the person the grantor names as the person they will be leaving their assets and property to. The grantor provides the assets and the property to the trustee for the beneficiary; they also have everything written up into the trustee's name for the beneficiary.
A trustee is a person who the grantor of the trust assigns to keep and protect the title for the assets and property for the beneficiary when they are either old enough or financially stable enough to take control of the assets. The trustee needs to be financially stable as well as trustworthy enough to be able to do the job under the grantor's wishes. The trustee may receive compensation for doing this for the grantor and beneficiary.
The grantor may have more than one trustee. These can either be close friends or family members or an organization or institution that the grantor trusts to keep the assets and property for the beneficiary.
Although the beneficiary of the trust only has one major duty (to receive the assets and property from the grantor through the trustee), they also need to do one other important thing before receiving what has been given to them. Beneficiaries must make themselves familiar with the trust agreement. They must know what they have coming to them and he or she will need to be in contact and on good terms with the trustee. The beneficiary may also have to pay taxes on what they receive from the trust owner.
The trustee needs to hold on to the assets and property that the beneficiary will someday get until the beneficiary is legally able to get them. The trustee will need to familiarize himself or herself with the trust agreement and also be on good terms with the beneficiary since they will be meeting at times. The trustee will also need to be able to keep good records of everything until it is time for the beneficiary to take control of the assets and property.
To learn more, check out our article, What Is The Difference Between A Will And A Trust?
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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