If you're named the beneficiary of a trust, grantors, trustees, and others can play important roles concerning what happens next.
You’ve been named the beneficiary of a trust. What does that mean—and what other roles are involved in a trust? Let’s start with the basics: Trusts are created to hold, manage, and transfer assets to beneficiaries, which can be individuals (or organizations, such as charities) who may receive benefits from the trust, either now or in the future. (To learn more about trusts, see “What are my options for wealth transfer?”)
What other roles are involved in the creation and management of a trust? These are the key players to know if you’re named as a trust beneficiary. (To learn more about the types of trusts, see “Choosing the Right Trust for Your Needs.”)
The grantor (also known as a trustor or settlor) establishes the trust and determines its provisions as set forth in a trust agreement or a will creating a trust—including who the beneficiaries will be. The grantor also determines what assets to place in the trust.
The trustee is an individual or entity with trust powers who holds legal title to the trust assets and is responsible for following the provisions of the trust instrument and governing law as they oversee the management and distribution of the trust assets.
In some instances, the grantor themselves may act as a trustee. Another option is for a corporate trustee and an individual to serve together as co-trustees. This structure could combine the insight of a family member with the administrative experience and asset management expertise of a corporate trustee.
A trust may or may not have a trust protector—an independent third party not related to the grantor, trustee, or beneficiary—who may be given one or more powers to aid in the administration of the trust. Trust protectors can be helpful in administering long-term or legacy trusts (sometimes called dynasty or perpetual trusts) because that role is often granted the flexibility to address unforeseen circumstances, such as changes in tax laws, beneficiary circumstances, or other administrative issues, which may arise after the trust is created.
Trusts may include a number of different types of investments. At times, the grantor will appoint an investment advisor to oversee the management of certain assets within the trust, such as closely-held businesses interests. The grantor may also appoint an investment advisor when the trustee is an individual that does not have investment expertise.
Trust services available through banking and trust affiliates in addition to non-affiliated companies of Wells Fargo Advisors. Any estate plan should be reviewed by an attorney who specializes in estate planning and is licensed to practice law in your state.