What is a trust agreement or a declaration of trust?
UPDATED: June 19, 2018
It’s all about you. We want to help you make the right legal decisions.
We strive to help you make confident law decisions. Finding trusted and reliable legal advice should be easy. This doesn't influence our content. Our opinions are our own.
These two terms refer to a written document that sets forth the terms and conditions of the trust. The differences between them are largely matters of style and local practice.
Provisions of a Trust Agreement
Typical provisions in a trust agreement or declaration of trust for an individual or married couple include a statement of the purpose of the trust, the names of the trust creator's family members, information on whether the trust creator or anyone else may amend or revoke the trust, who will serve as the initial trustee(s), and who will replace the initial trustee if s/he is unable or unwilling to serve, in the event of illness, death or for any other reason.
Trust agreements also typically contain provisions for what powers the trustee should have, both in terms of investment and in terms of management. They also stipulate the discretion the trustee is to have in terms of releasing money to beneficiaries, such as for educational purposes, and more.
To be even minimally effective, trust agreements must list who thebeneficiaries of the trust are, or how to determine them. For a living trust, the trust creator and his or her spouse are typically listed as beneficiaries. Further, infromation must be included regarding who is to receive distribution of the estate upon the death of the grantor. In addition to who, any conditions for when the estate is to be distributed must also be included in the declaration of trust. For instance, many grantors stipulate that child beneficiaries aren’t to receive their full distributions until they reach a certain age (e.g. age 21, or half at age 21 and half at age 30).
Role of Trust Agreements in Estate Planning
Declarations of trust/trust agreements don’t face too many restrictions or legal requirements. Though it is generally a good idea to put trust agreements in writing, some states don’t even require that – an oral declaration is sufficient. If you have further questions about trust agreements or estate planning, view the following section on FreeAdvice.com containing articles about Setting Up a Trust, or consult with a qualified estate planning professional in your area.