Estates and Trusts: Define the terms and give examples to demonstrate situations where the creation of a trust might accomplish trustor objectives. Briefly explain taxation concepts of the income generated in a trust. Compare a trust to an estate.
First, three definitions of terms
Grantor (trustor): the person who sets up and transfers property to a trust
Trustee: the person (or entity) who will administer the trust
Beneficiary: the person(s) who will receive the property in the trust
A trust is an arrangement in which property is transferred by the grantor to a trustee, to be held and managed by the trustee for the benefit of the people called beneficiaries. The types and terms of trusts are varied and often complex, but the legal formation allows for great flexibility in the creation of a trust. ...
The solution provides a decent explanation of what a trust is, how it is created including definition of terms. Included is a list of eight reasons why a trust might be created plus a list of six types of trusts. The list is not all-inclusive but presented to show the wide diversity of types of trusts.