Trusts - Elements, Types, and Determination

The video tutorial explains the concept of a trust, a legal construct used primarily in estate planning to manage assets for a third party's benefit. It details the roles of the settler, trustee, and beneficiary, and discusses the legal and equitable rights associated with trusts. The tutorial also covers different types of trusts, such as living, testamentary, revocable, and irrevocable trusts, highlighting their uses and characteristics.

What is the primary purpose of a trust in estate planning?

• To allow the settler to avoid taxes

• To provide a loan to the beneficiary

• To create a legal entity for business operations

• To ensure assets are managed for the benefit of a third party

Who is responsible for managing the assets within a trust?

• The lawyer

• The trustee

• The settler

• The beneficiary

What are legal rights in the context of a trust?

• Rights to manage the trust

• Ownership rights of the trust

• Rights to receive benefits from the trust

• Rights to dissolve the trust

How can a trust be useful in estate planning?

• By allowing immediate asset distribution

• By providing tax-free income

• By transferring assets into the trust for future distribution

• By avoiding all legal documentation

What is a living trust?

• A trust created after the settler's death

• A trust created while the settler is alive

• A trust that cannot be revoked

• A trust that only holds real estate

What distinguishes a revocable trust from an irrevocable trust?

• A revocable trust allows the settler to withdraw assets

• A revocable trust is only for charitable purposes

• A revocable trust is created after the settler's death

• A revocable trust allows the settler to change beneficiaries

When is a testamentary trust created?

• When the beneficiary reaches adulthood

• After the settler's death

• During the settler's lifetime

• When the trustee decides