TRUSTS

A trust is a tool that an individual or institution uses to transfer property to a beneficiary. The party that grants the property is called the trustor. The trustor, in turn, gives the property to the trustee, who is charged with the task of disbursing the property to the beneficiary according to the instructions of the trustor. In the early 1990s, more than __BODY__ trillion were held in U.S. trusts.

One important advantage that a trust has over a simple gift is that the trustor can exercise control over the disbursement of funds or property over time, even after his or her death (or dissolution, in the case of an institutional trustor). For example, a trustor may stipulate that funds periodically transferred to an all-male academy must be terminated if the school begins enrolling females. A second, and perhaps more important, advantage is that trusts can be used to minimize tax burdens incurred when wealth is transferred.

The two main categories of trusts are non-charitable and charitable, they are differentiated from one another primarily by tax status. Charitable trusts are organized for non-profit beneficiaries, such as educational, religious, and charitable organizations. Beneficiaries of noncharitable trusts typically include individuals or groups—particularly relatives or employees of the trustor—or profit seeking organizations.

Most trustees in the United States are banks' trust departments. However, other types of financial institutions act as trustees, and some companies specialize in trust management. Furthermore, a few trustees are separate entities that have been set up as foundations to manage large trust funds.