You've probably already heard about the benefits of a trust -- how it's much like a will except for the fact that your loved ones don't have to navigate the probate process when you pass away. You probably also know that a trust may potentially save your heirs a considerable amount of money in taxes.
However, you may still have a rather foggy idea of what all the different terms mean. What is a "grantor"? Is the "trustee" the person who inherits the money? How is the "beneficiary" involved?
Let's look at the various terms and how they relate.
The Internal Revenue Service provides a useful overview of the most commonly used terms associated with trusts. Here are the basics:
Grantor: This is you, the person who owns the property or assets to begin with. (You may also be referred to as a "founder" or "settler.")
Beneficiary: This is the person or organization that will ultimately receive your assets or money. A beneficiary "benefits" from the assets.
Trustee: This is the person or business responsible for taking care of the assets for your chosen beneficiary.
So, in summary, you are the grantor. The person you want to benefit from your money is the beneficiary. The caretaker or manager of your money is the trustee.
Of course, understanding the terms doesn't answer the question of whether a trust is appropriate in your particular situation or not. To learn the answer to this question, consider consulting an experienced estate planning attorney in California.