Page 43 - Book10E

CHAPTER 5
Creating a Trust
As explained by the Oregon State Bar, in simple terms a trust is a relationship in which a person, called a trustor, transfers something of value, called an asset, to another person, called a trustee. The trustee then manages and controls this asset for the benefit of a third person, called a beneficiary. An asset is any kind of property.
Because a trust can be set up before your death, there is no need for court approval of the trust or the trustee, thus saving the time and expense of court proceedings. One of the uses of a trust is to provide flexible control of assets for the benefit of minor children. Children cannot legally handle their own financial affairs before they reach the age of 18 or 21 depending on which state they live in.
One purpose of creating a trust for a child is to assure the trustor that the child will be benefited but will not have control of the trust assets until the child is older. In establishing a trust, the trustor selects a trus- tee and specifically instructs the trustee how the assets will be used for the beneficiary. A trust for the benefit of minors often takes effect when both parents have died. It is usually set up to provide for the support, care, and education of the children until they have reached the age set by their parents to actually receive the assets being held by the trustee.
Another use of a trust, known as a “revocable living trust”, is as an alternative to a will. This type of trust is revocable and amendable meaning it can be terminated or changed by the trustor anytime dur- ing the trustor’s life. However, it may not be changed after the trustor’s
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