To establish a trust, a grantor decides the terms, works with a trustee to establish the trust and transfers assets. A trustee may be an attorney, bank or other entity, states Investopedia. The transfer of assets is irrevocable, and so the grantor must be sure she wishes to transfer.
Trusts are flexible and allow for the grantor to customize terms according to the intended beneficiary, according to USA.gov. The grantor is able to decide how the funds are invested, when beneficiaries may withdraw funds and how a trustee may be removed.
Two key advantages of a trust are the ability to begin dispersing funds before the grantor passes away and the privacy offered as compared to a will, which must be public, states Investopedia. The primary disadvantage is the cost of establishing a trust with the assistance of someone knowledgeable about the taxes that apply to income generated by the trust's invested funds.
High-pressure and fraudulent tactics can be involved in the sale of trusts, states USA.gov. Grantors should be advised that the AARP does not endorse living trust products, and some states restrict licensed attorneys from selling trusts. Conducting research on local laws and carefully considering each section of the trust can help prevent fraud and other issues.