Many people who serve as the executor of an estate also play the role of trustee—that is, they are in charge of property that has been left to beneficiaries in a trust, not a will. Many kinds of trusts are used in estate planning, and virtually all of them can be classified as express trusts. An express trust is simply one that is created knowingly and intentionally—for example, a revocable living trust set up to avoid probate, or a charitable trust designed to minimize taxes and benefit a favorite charity.
A trust is a legal arrangement in which one person, called the trustee, controls property for the benefit of another person, called the beneficiary. The person who creates the trust is called the settlor, grantor, or trustor.
In many kinds of common trusts used in estate planning, the grantor is also the trustee. For example, the most common kind of trust is probably the revocable living trust, which essentially performs the same function as a will: to leave property at one’s death. (The advantage of leaving property in a living trust is that after the settlor dies, the property doesn’t have to go through probate court proceedings before it can be transferred to the beneficiaries.) People who set up this kind of trust typically make themselves the trustees. This gives them complete control over the trust property, so that if they someday change their mind and want revoke the trust or name different beneficiaries, they can.
It’s also common for people to create express trusts that take effect only at their death. For example, grandparents who want to leave money directly to a young grandchild might use their wills to provide that if the child is still under age 22 when he or she inherits, then a trust must be created for the funds. An adult trustee, not the grandchild, would manage the money until the child was older.
The opposite of an express trust, in legal terms, is an implied trust. This is a trust that is implied by the circumstances and can be created only with the intervention of a court that is trying to right a wrong or clear up a misunderstanding. There are several kinds of implied trusts, which may be called constructive trusts or resulting trusts, depending on the circumstances.
For example, say Maria gives her friend Carlo $100,000 and asks him to “buy the old Bartlett place if it comes on the market.” If Carlo buys the property but puts it in his own name, not hers, a court could impose a trust, ruling that Carlo holds the property only for Maria’s benefit. Similarly, a man might transfer a bank account to his daughter with the understanding that the funds in the account are to be split among all the man’s children after his death. If the daughter keeps all the money, her siblings could sue. They would have to come up with proof of what their father intended and convince the court to declare that the daughter holds the money in trust for the other siblings.
Obviously, in estate planning as with other legal and financial matters, it’s always best to create documents that clearly express the planner's wishes and avoid disputes or a court fight. Litigation, with its expense and acrimony, imposes a big cost on everyone.