The term “trust” refers to an arrangement in which one person holds property for the benefit of another. In estate planning we commonly use revocable and irrevocable trusts as tools to bypass traditional probate. You give your assets to a trustee, who then administers the property for the benefit of the persons you name in the trust instrument.
Sometimes the word “trust” is used to signify something else. For example, you may have heard the term “Totten trust” used by banks. A Totten trust is really not a trust; it is a type of payable-on-death bank account. The person establishing the Totten trust has the unrestricted ability to withdraw money from or close the account. The “beneficiary” is simply the person who receives the remainder of the account, if any, upon the account holder’s death.
Court Imposes “Constructive Trust” After Stepson’s Mistake