Setting Up Wills and Trusts.

• Author: Surtees, Doug

Not all families are the same. That is why not all wills should be the same. The law provides us with tremendous flexibility in deciding how to leave our estates to our loved ones. In order to understand some of the choices you should consider, it is essential to understand the difference between a will and a trust.

What is a trust?

The trust is an ancient common law concept, which manages to appear simple and complex at the same time. At a simple level, everyone who has sold tickets to raise money for a charity probably has thought about trust concepts. We almost intuitively understand that the money we raise by selling tickets 'really' belongs to the charity. We are responsible for it, but we consider it to ultimately be the charity's money.

We call a person who sets up a trust a settlor. The trust can be used to transfer money to one person, such as your sister, to be used for the benefit of another person, such as your daughter. We call the person who has legal title to the money the trustee, and the person for whom the money is used the beneficiary.

When a trust is created, we separate legal title (sometimes loosely called 'ownership') from equitable or beneficial title ('ownership'). This transfer of title occurs immediately upon the creation of the trust. In the ticket example, we have legal title (and only legal title) to the ticket money, as soon as we receive it. We have the right to keep the money in our teapot, or in a bank account, as appropriate, until it is...