By creating a trust, grantors form a separate entity that may own the assets transferred to it. As noted by the Superior Court of California, County of Santa Clara’s website, real estate titles may list a trust as a property’s owner.
A trust’s grantor generally retitles a deed from an individual’s name to the name of the trust. Once completed, the trust legally owns the asset. Depending on the trust’s documents, the trustee may then use the asset to make investments or generate income from it.
Properties that a trustee may add or remove from a trust
With a living trust, its grantor may add or remove property up until his or her death. After its grantor dies, a living trust becomes irrevocable and may not change. If an individual dies without transferring property to a trust, the trustee may petition the probate court to include an asset.
Kiplinger’s Personal Finance reports that common trust holdings include financial accounts, life insurance policies and business interests. Grantors may revise their stock and mutual fund account forms to list their trusts as the owners. Collectibles such as vehicles, antiques and artwork may also transfer to a trust.
The trustee’s duties for managing trust assets
California’s Probate Code requires trustees to preserve and protect the property placed in the trust. Grantors may include instructions outlining how a trustee should manage the property. The instructions could, for example, describe how to distribute income to the trust’s beneficiaries. A trustee’s duties include settling estate tax matters after the grantor dies. It may also involve selling the trust’s assets and distributing the proceeds.
Grantors typically form trusts as a separate legal entity so that the trust may own the assigned assets and properties. A grantor may include detailed instructions specifying how a trustee may manage the trust’s assets to provide for named beneficiaries.