Court Bonds

What Is a Trust?



Estate planning increasingly involves the establishment of a trust, which is a practical way to designate funds for our own needs and for beneficiaries, including children or those with special needs. Trusts allow for the distribution of funds over time—which wills do not. Trust agreements can be written to address a variety of goals. Read on for a basic overview of trusts.


Trust Basics Explained

Because trusts allow the people establishing them to determine what assets are placed in them—and how the assets are to be distributed, they enable a great deal of flexibility and can be customized to address a variety of circumstances. Frank & Kraft offer this helpful overview:


A trust is a legal relationship where property is held by one party for the benefit of another party. The person who creates a trust is referred to as the Settlor”, Trustor” or Grantor.” The Settlor transfers property to a Trustee, appointed by the Settlor. The Trustee holds that property for the trusts beneficiaries as well as invests trust assets and administers the trust terms according to the terms created by the Settlor. Trusts are broadly categorized as testamentary or living trusts with the former activating after the Settlors death and the latter activating during the Settlors lifetime.


Examples of the many types of trusts, including revocable, irrevocable, asset protection,  and charitable trusts are available right here. Trusts can be an especially important way to look out for family members with speciall needs. When working with a lawyer to establish a trust, its common to set up a pour-over-will, which offers a convenient, ultimate solution for any assets not placed in a trust. An attorney can also provide guidance on carefully selecting the trustee who will oversee the administration of the trust. It’s important to understand the many duties trustees undertake and designate someone who is prepared for the role. Frank & Kraft stress that the main objective of a trustee is the management and distribution of the assets in the trust, in accordance with the terms established by the settlor, and urge consideration of these factors when choosing a trustee among loved ones, or securing a professional fiduciary:


Experience/skills – …Your Trustee will need to understand the applicable laws and financial concepts necessary to successfully administer the trust….


Willingness to honor your wishes — legally, a Trustee is required to abide by the trust terms as written by the Settlor. A Trustee must also have some discretion though. Make sure you appoint someone who will honor your wishes…even if they dont agree.


Absence of conflicts — try to appoint someone who is not likely to have a conflict of interest with the trust beneficiaries. This is another reason why a professional Trustee is often the best option.


Willingness to serve — people often fail to sit down with a prospective Trustee and ask if he/she is willing to serve in the position. There are several legitimate reasons why someone might not feel comfortable serving, including the possibility that they might be grieving your loss and emotionally unable to handle the job.


Learn more about the essential duties of trustees right here. Lawyers point out that assets placed in a trust do not go through the probate process, “which means this person will have no court oversight in how they do their duties as trustee—choose wisely!” It’s best practice to incorporate as much detail as possible about the purpose and terms of the trust into the trust agreement. Then consider the qualities, skills and time commitments a trustee will need to successfully administer it. Ultimately, whether a professional, friend, or relation is selected, the trustee has a fiduciary obligation to the beneficiaries—and must always exercise reasonable care and skill in managing the assets of the trust. Accordingly, the trust agreement may require a trustee bond, which is a specific type of fiduciary bond that protects the interests of the trust and its beneficiaries in accordance with applicable state law.


Basically, trustee bonds guarantee the faithful performance of the trustee. As a leading national provider of many types of fiduciary bonds, Colonial Surety makes it easy and efficient to obtain a trustee bond. Just get a quote online, fill out the information, and enter a payment method. Print or e-file the bond from anywhere—even the law office. Obtain a Trustee Bond Here.



Trust Law?

In addition to providing bonds directly to the general public, Colonial offers The Partnership Account® for Attorneys . This free business service provides user-friendly client management dashboards, enabling attorneys to easily coordinate, view, complete and e-file the court and fiduciary bonds clients need. See for yourself today: The Partnership Account® for Attorneys.


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Whenever and wherever you need a bond, trust Colonial: