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Trusts Part I: What is a Trust?

By its most basic definition a trust is an agreement by which one party gives control of property or assets to another for the benefit of a third party. Trusts can be used for numerous purposes including the passing of property outside of probate, the protection of assets from certain creditors, and the benefit of someone who is not responsible with money.

There are three main players in any given trust arrangement:

Donor – the person who creates the trust. The Donor is the one who funds the trust with property or assets, determines the rules and guidelines for the trust, and names the trustee and beneficiary under the trust. There can be one or more Donors to a trust. (The Donor can also be called the Settlor or Trustor)
Trustee – the person who manages the trust. The Trustee is a person named by the Donor to manage the property or assets that are placed into the trust. There can be one or more Trustees named under a trust.
Beneficiary – the person benefiting from the trust. The beneficiary is the person who is named to receive some payment of income or principle from the trust. There can be one or more beneficiaries named under a trust.

Under any number of circumstances a person may take more than one of these roles, depending on the ultimate purposes of the particular trust. Trusts come in many iterations, for the purposes of this series general trust provisions and types will be discussed with a focus on specific Massachusetts based laws and rulings.

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