When you die, all of your possessions will go to someone else shortly afterward. Whether the possessions go to the person that you would have wanted them to go to depends on your estate planning. Setting up a trust can allow you to choose a beneficiary that will receive your property when you die.
Parties in a Trust
When a trust is set up, it involves three different parties. The person who sets up the trust and puts the assets into it is known as the grantor. The grantor sets up the trust and leaves the property in the possession of another individual known as the trustee. The trustee then take the responsibility for the assets in the trust and transfers the assets to another individual at a certain point in the future. The person who receives the assets from the trust is the beneficiary.
Depending on your wishes, you also can set the trust up to have multiple beneficiaries. If this is the case, you simply name the beneficiaries in the trust documents and specify exactly what property goes to which one. Then at the time of your death, the trustee will take the appropriate property and pass it onto each beneficiary that you name. This is common when you want to leave property to several children and a spouse.
Depending on the type of trust that is set up, the beneficiary may have some restrictions placed on him. For example, the beneficiary may not be able to gain access to the property immediately after the grantor passes away. Instead, the beneficiary may have to wait until a certain point in the future. For instance, you might have to wait until you reach the age of 25 before you can inherit a large estate from the trust.
In some cases, a trust may also include information about contingent beneficiaries. A contingent beneficiary is an individual who steps in to receive the assets in a trust if the primary beneficiary is unable to do so. For example, if the beneficiary of the trust and the grantor both die in a car crash at the same time, the beneficiary would no longer be able to inherit the assets. In that case, the contingent beneficiary would get everything.