WHAT IS A TRUST? 

 

The true purpose of a trust is always to manage the property or trust assets for the specific benefit of the beneficiaries. The terms and conditions of the Trust strictly define the form of the trust used and the needs of the people it is created to serve.

TRUST ESTABLISHMENT

 

To establish a trust, consideration of some type (money or property) is transferred from a Settlor to another person (known as the trustee), with the understanding that the recipient will hold the property and assets or use them in a way that is directed or established as laid out in the terms and conditions of the trust for the direct or indirect benefit of any or all of the beneficiaries. Anyone who benefits from the use of the property or assets is considered to be a beneficiary.

BASIC TRUST INFORMATION

 

Trusts are legal entities, made with contract law, existing of 3 parties that can be used to transfer and manage property or assets. The three parties in any trusts are the Grantors (Settlors), the Trustee, and the Beneficiaries. It is an ingenious entity empowering Trustees of the Trust to have and hold all control over that property or assets. The true purpose of a trust is always to manage the property or trust assets (also known as the corpus) for the specific benefit of the beneficiaries. The terms and conditions of the Trust strictly define the form of the trust used and the needs of the people it is created to serve.

TRUST ESTATE

 

The property or assets that are transferred to a trust becomes the trust corpus. The Trustee of a trust is the only entity that can affect the transfer of assets, property or monies to a trust. A trust estate consists of all of the property (tangible or intangible), assets, cash, rights and obligations that are transferred to the trust. The trust estate is managed in accordance with the terms and conditions of the documents creating the trust. Because the property is held in trust it is generally not subject to turnover*. There are limited exceptions to being protected from creditors. It varies from state to state. For example, a statute in Texas allows a court to garnish child support payments from a spendthrift trust.

CATEGORIES OF TRUSTS

 

All trusts essentially fall into one of each of the three different categories. All trusts are either revocable or irrevocable, simple or complex, grantor or non-grantor trusts. Every trust falls into one of each of these three categories. It completely depends on the meaning, purpose and wishes of the grantor, whomever created the trust, as to which of these three categories are used in the formation. Each of these categories carries with it very consequential outcomes, depending on which ones are chosen.

 

  • In the past 32 years our tax accountants have filed over 18,000 trust tax returns.

The Nexxess Trust is written to comply with 8 different trust-law categories and governing laws or codes. They are:

 

01

Scott on Trust Law

02

The Restatement of Trusts

03

The Internal Revenue Code

04

UTC - The Uniform Trust Code

05

UPIA - The Uniform Prudent Investor Act

06

UCC - Universal Commercial Code

07

Statute of Frauds

08

The Rule Against Perpetuities

This was done so the trust corpus would be protected from turnover orders by any court or judge and be separate from legislative control or actions.