What is a Trust and How Does it Work?

[Music] Hi this is Keith Davidson at Albertson and Davidson in this video I'm gonna give you a brief overview of what a trust is and how it works and so typically what happens is husband and wife want to create a trust and a trust is really just a separate entity to hold husband and wife's assets so the husband and wife are going to be known as the set lowers set Lord just means trust creator that's all that means because they've settled the trust and so they're going to create this trust and they're going to take all of their assets their money their house everything they own and they're going to transfer it into the trust the way that they transfer it into the trust is they put it into the name of the trustee the trustee is the trust manager that's the person who's going to manage these assets and typically when husband and wife create a trust husband and wife will be trustee during their lifetime they're going to be the ones who manage the assets well that's no different from what happened before they had a trust they manage their own assets before the trust once it's in the trust they're going to manage their own assets as trustee but there's a separate group of people now besides the trustee and that's the beneficiaries the beneficiaries are the people who are going to receive the benefit of these assets as opposed to the trustee who's the legal owner the trustee makes all the ownership decisions when to buy when to sell what to invest in the beneficiaries receive all of the money that flows off of those decisions so when a husband and wife create a trust they're usually the trustees of that trust and they're also usually the sole beneficiaries of that trust during their lifetime so they manage the assets as the legal owner but they also get the benefit of those assets as the beneficiaries once mom and dad passed then the beneficiaries typically are going to be the children and so let's say they had three children now the beneficiaries are going to be divided up into thirds and everybody's going to be a beneficiary of these assets that are in this trust but the children may not be the trustee maybe one of them is trustee maybe none of them are trusty maybe they have a trusted friend we'll call that trusted friend Bob and so after mom and dad are gone Bob steps in now he's the trust manager he has to manage all of this oversee it and do what the trust terms tell him to do and if the trust terms say hey Bob once you take over we want you to give the assets equally to our three kids and they can have those assets out right once they reach age 25 then that's what Bob does is he manages the assets and as the kids turned 25 he gives each child their share of the trust estate so really what a Trust does is it holds the title to the assets and it separates out the legal owner from the beneficial owner the trustees from the beneficiaries but ultimately at the very end of the day the trust is going to terminate at some point and when it does the assets will pass out to the beneficiaries and then the beneficiaries would have to create their own trust if they want to keep this type of planning going so that's a basic overview of what a trust is and how it works Albertson and Davidson is here to help you fight for your inheritance check out al Dave law comm for our complete library of helpful legal videos and articles from your favorite California trust and we'll litigation law firm Albertson and Davidson LLP.