What it is: a legal tool (created under contract law) that lets you set aside money, property, or other assets for the benefit of another person (the beneficiary) — managed by a trustee according to your terms.
Why trusts are used: to control when and how beneficiaries receive assets (e.g., “pay for college, then at 25 the rest”), to protect a person with a disability (special needs), or to avoid probate for certain assets. There are different types of trusts for different reasons — described below.
The three roles: the grantor (you, who creates it and funds it), the trustee (who manages), and the beneficiary (who benefits). One person can wear more than one hat — during your life you’re often both grantor and trustee of your own revocable trust.
Watch out for: a trust only works if it’s funded — assets titled in the trust’s name. A “trust” sitting in a drawer with your house still in your own name does nothing. Fund it.