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Simple English definitions for legal terms
trust instrument
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A quick definition of trust instrument:
A trust instrument is a written agreement that explains how a person's property will be distributed to their beneficiaries. The person who creates the trust is called the settlor, and they can change or cancel the trust at any time. The trust must have a beneficiary, a trustee to manage the property, and property that is legally owned by the settlor. The trust instrument must follow certain formalities to be valid, such as being in writing and signed by the settlor. There are different types of trust instruments, including those created while the settlor is alive (inter vivos), those created through a will (testamentary), and those that can be changed or cancelled (revocable) or cannot be changed or cancelled (irrevocable).
A more thorough explanation:
A trust instrument is a legal document that outlines how a person's property will be distributed to their beneficiaries. It is created by the person who owns the property, called the settlor, and can be changed or cancelled by the settlor at any time. The trust instrument must be recognized by a legal authority to be valid.
- Beneficiary: The person or organization who will receive the property from the trust.
- Settlor: The person who creates the trust and owns the property.
- Trustee: The person who manages the trust and distributes the property to the beneficiaries.
- Property: The property that is being placed in the trust.
- Formality: The legal requirements that must be met for the trust instrument to be valid.
There are different types of trust instruments:
- Inter Vivo Trust: Created while the settlor is alive.
- Testamentary Trust: Created through the terms of a settlor's will and goes into effect after their death.
- Revocable Trust: Can be changed or cancelled by the settlor at any time.
- Irrevocable Trust: Cannot be changed or cancelled by the settlor once it is created.
For example, if a person creates a revocable trust instrument and later decides to change the beneficiaries, they can do so. However, if they create an irrevocable trust instrument, they cannot change the beneficiaries once it is created.
Overall, a trust instrument is an important legal document that helps ensure a person's property is distributed according to their wishes. It is important to understand the different types of trust instruments and their requirements to create a valid trust.