A Five Second History on
In early England, any peasant that died with a debt owed to the “Land Lord” would have their lands and property confiscated by the royalty and their family left out in the cold. Those that wished to protect their property would deed their property to the church "In Trust." That meant that the family could live on the property for all their generations until no heirs survived. At that time, the church would inherit the property. This practice was later included into the Statute of Uses and English Common Law as a proper means of holding property.
When America was formed we had no body of laws and so we adopted in to the English Common Law and the concepts of probate, wills, and trusts. The first known trust written in America was by Patrick Henry for the governor of Virginia, Roger Morris. And through succeeding generations, the informed have used trusts extensively to preserve their wealth and avoid the nightmares of the Probate Court.
It must be understood that in this country, all property, real or personal, passes at death in one of three ways:
(1) by right of survivorship, (2) by right of contract, or (3) through probate.
Right of survivorship is established through joint tenancy or community property forms of ownership which is discussed in the "Living Trust Instructional Manual".
The right of contract means that special terms are established between two (or more) people as to the rights of the survivor(s) if one of them should die before the contract is completed (i.e.; trusts, partnerships, corporations, insurance policies, IRAs, pension plans, etc.).
That third transfer mechanism, probate, can be quite costly and needless. On the other hand, it can be a serious mistake and even more costly to put all assets in joint ownership simply to avoid the probate process. Understanding the probate process is essential to avoid both of these types of mistakes.
Download "What Is An Independent Trustee?: PDF format
Types of Trust Chart
The following chart is only a partial list of all the types of trusts available. There are a host of other "so-called" trusts with expensive names and fancy labels but when reduced to their basic objectives; fit into one of the categories listed below. In either event; every entity below requires the highest degree of fiduciary responsibility over not only the conservation of the assets but the distribution of assets, income, interest, dividends, etc. Taxes need to be paid, investments must be wisely considered, and books still have to be kept. Please consider the best person, individual or corporate, for the task set before them. Select the most competent, not necessarily your "first born", to fill the shoes of a successor trustee. Before you do a living trust; you might want to review California's Attorney General Locyer's warning to California seniors concerning "trust mills and insurance product scams."