Trusts at a Glance

What is a Trust?

A trust is a fiduciary relationship in which a third party (the trustee) holds the title to property (the trust estate or trust property) for the benefit of another (the beneficiary).

Common Types of Trusts

Revocable Trust (Living Trusts)
A Revocable Living Trust is a legal document that is created by an individual, called the grantor, to hold and own the grantor’s assets. It states provisions to dispose of these assets at death and names a Trustee to administer the assets. Revocable Trusts can be revoked or amended.

Irrevocable Trust
A Trust that cannot be changed that outlines the terms, appoints a trustee, and chooses the beneficiary. The trustee named in the trust document is responsible for managing the assets in the best interests of the beneficiary and carrying out the wishes of the grantor. Irrevocable trusts are typically used for the tax benefits they provide by permanently removing assets from one’s estate.

Charitable Trust
An irrevocable trust established to benefit a charitable organization and their non-charitable interests. These are typically called a Charitable Lead Trust and a Charitable Remainder Trust. With a Charitable Lead Trust, a charity is named as the income beneficiary for a fixed number of years, after which the remainder of the assets pass to non-charitable beneficiaries. A Charitable Remainder Trust provides current income to the non-charitable beneficiaries, usually the grantor, for life or a term of years. At the time of termination, the assets are distributed to one or more charities.

Supplemental Needs Trust
An irrevocable trust established to provide supplemental funds to a disabled person in a manner that does not jeopardize his or her access to governmental rehabilitation or support programs. Ordinarily when a person is receiving government benefits, an inheritance, gift, or even receipt of a sum of money for damages in a personal injury lawsuit could reduce or eliminate the person’s eligibility for such benefits. 

Trust Under Will
A Testamentary Trust (sometimes referred to as a Will Trust or Trust Under Will) is a Trust which arises upon the death of the person who makes the will and which is specified in his or her will. A will may contain more than one testamentary trust, and may address all or any portion of the estate.

ESL can act in the capacity of a Trustee or Co-Trustee for Testamentary Trusts.

Beneficiary
A person or organization entitled to any income or principal of an estate, trust, or other contract, such as a life insurance policy or retirement plan. Beneficiaries can have present interests or future interests. An “income beneficiary” is a person presently entitled to some or all of the income of a trust. A “remainderman” is a beneficiary entitled to the balance of a trust fund only after another beneficiary has died or the trust is otherwise terminated.

Grantor
The individual who creates a trust and is generally the owner of the assets initially contributed to the trust. The grantor typically establishes the terms and provisions of the trust relationship between the grantor, trustee, and beneficiary. Also known as settlor, creator, or trustor.

To learn more about Trusts and ESL Trust Services, call our team at 585.336.1300.

What is a Trustee?

The trust is managed by a trustee — a person or team of people who are appointed to administer the affairs of an individual or institution.

What is a Corporate Trustee?

A legal entity, such as a trust company, that is designated as a trustee. ESL Trust Services can act as a corporate trustee for our clients. We help build, manage, and protect the wealth in their trust.

What are the Benefits of Using ESL Trust Services?

• Objectivity – A corporate trustee acts with impartiality so that they can help prevent any conflicts of interest and carry out the requirements of the trust.
• Teamwork – A corporate trustee has a team of experts who work together to meet regulatory requirements, respond to inquiries, and manage investments.
• Cost-Effectiveness – A corporate trustee can consolidate costs and achieve savings.
• Stability – A corporate trustee has a staff that will seamlessly keep a trust that may be functioning for decades.
• Confidentiality – Corporate trustees have developed protocols to ensure your communications and transactions are confidential and secure.

Taking a Hybrid Approach

At ESL, we often recommend a hybrid approach. This is when we become a co-trustee with a family member or individual trustee. We work with them to ensure that the trust’s requirements are carried out exactly as specified, and with impartiality. This is especially important if differences of opinion or family conflicts occur. As a corporate trustee, we are also the legal entity that objectively manages and provides advice on the trust in accordance with our criteria of objectivity, teamwork, cost-effectiveness, stability, and confidentiality.

What is a Fiduciary?

A fiduciary is an individual or a corporate entity who is responsible for helping to transfer and safeguard an individual’s or family’s wealth during their lifetimes — and after. They can serve as executor or co-executor of an estate or trustee or co-trustee of a trust. The role of a fiduciary is complex and may be burdensome and time consuming. A fiduciary has many important tasks: administration, investments, tax preparation, and record keeping. The essential qualities are judgment, objectivity, and experience.