What Is A Trust, And When Should You Use One? (2026)

How a Trust Works and Who's Involved

A trust is a legal entity that “holds” assets, and it often controls how those assets are distributed. These key parties are usually involved:

• Grantor, Trustor or Settlor: The person who creates and funds the trust
• Trustee: The institution or person responsible for managing and distributing trust assets
• Beneficiary: The person or entity who will ultimately receive the assets

Sometimes, grantors can also serve as trustees. This is common in living trusts and other kinds of revocable trusts.

Types of Trusts You Should Know

There are many kinds of trusts, and each has a specific purpose. Some of the most commonly used trusts are living trusts, joint living trusts and living trust certificates:

• Living Trust: A living trust holds your assets during your lifetime and lets them bypass probate. Creating a living trust can also allow you to name someone to manage your assets if you become incapacitated.
• Joint Living Trust: A joint living trust holds the assets of two people, usually a married couple. If you create a joint living trust with your spouse, make sure it’s personalized to both your needs.
• Living Trust Certificate: A trust certificate proves that a trust is legitimate without providing all relevant details. It’s usually given to financial institutions or other third parties. Create a living trust certificate in minutes online.

Living trusts are revocable trusts, which means that you retain the authority to modify or dissolve them at any point.

Benefits of Setting Up a Trust

So what is a trust for? Creating a trust comes with several potential benefits, including these:

• It gives you more control over how your assets are distributed.
• It helps you ensure your assets are taken care of if you become incapacitated.
• Revocable trusts, like living trusts, offer you a great deal of flexibility.
• A trust helps your assets avoid probate.

The fact that a trust helps avoid probate is a major benefit. Probate is the long, expensive legal process of validating a deceased person’s will.

Trust vs. Will: Key Differences

What is a trust vs. a will for estate planning? A will specifies the distribution of your assets after death, and it generally must go through the probate process. Wills are simple and cost-effective.

A trust goes into effect as soon as it’s created, so it can help manage your assets during your life and after death. It also gives you more control over the distribution of your assets.

How to Set Up a Trust

Setting up a trust can be complex, and errors can lead to major problems down the line. The best way to make one is to ensure you choose the right type and consult an experienced estate planning attorney. A little planning now can go a long way in the future.

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