There are many kinds of trusts. The central feature is that property is given to one person to hold and manage and invest for the benefit of another. The person who holds the property is called a trustee. The trustee may be an individual or a bank trust department or trust company. The banks and trust companies usually get paid for their services. There can be one or several trustees. The person or persons for whom the property is held are called the beneficiary or beneficiaries of the trust. (The word beneficiary is also used in many other contexts, i.e., beneficiary of an estate or beneficiary of a life insurance policy or a pension plan.)

Trustees can be given wide powers by the terms of the trust. If not, their powers are more restricted by statute. They do not ordinarily hold speculative assets or make risky investments. Without specific directions they are not allowed to conduct active businesses. But the trust can allow or direct them to do so. In this way family businesses can be held in trust for family members who may not be capable of running them. The trust can also delegate management authority to persons who may be more capable of exercising it than the trustee.

A trust commonly contains directions as to who gets the income and whether or not that person can get principal and when. After a fixed or measurable period of time or on that person's death, the trust usually provides that someone else then gets the income interest or that the trust is to terminate. On termination the trust specifies who get the trust assets.

Any type of property can be held in trust, but most trust assets consist of income producing property such as stocks, bonds, CDs and rental real estate. The trustee's duty and objective usually is to hold property producing income and to preserve the value of that property.

A person can create a trust while he or she is living or in his or her will. A person can also be trustee of a trust he or she creates. The person who creates a trust can also be a beneficiary of the trust as well as the trustee. All trusts are irrevocable and cannot be changed unless the person who creates them explicitly retains that right or gives it to someone else.

Illinois Trust Lawyer Donald M. Thompson * 55 W. Monroe #3950; Chicago, IL 60603
Ph: 312-782-0844 * Fax: 312-201-1436 * Email: donthompsonlaw@sbcglobal.net