Trust

Definition:

• Trust is a legal relationship, not a person, under Common Law (e.g., US, UK).

Related parties:

• Settlor (or Grantor)  --(transfer assets)-->  Trustee
• Beneficiaries (e.g., settlor's children)

Discretionary Trust and Fixed Trust

Trust				Control of Distributions by
Discretionary				Trustee
Fixed				Predetermined terms (*1)

(*1) distributions thru (1) language in the trust document and/or (2) a non-binding letter of wishes

Irrevocable Trust and Revocable Trust

Trust			Beneficial Owner of Trust Assets	Legal Owner of Trust Assets (*2)
Irrevocable			Beneficiaries	Trustee (*3)
Revocable			Beneficiaries	Settlor

(*2) including Tax Payment due
(*3) In general, creditors (of a Beneficiary) are unable to reach assets that an individual (i.e., Beneficiary) does not own. (Just as an irrevocable trust can protect assets from claims against the Settlor, discretionary trust can protect assets from claims against the Beneficiaries.)