Trust is a crucial part of relationships, business operations and social interactions. We trust our parents and romantic partners to love us, we trust our business partners to uphold their contracts and agreements, and we even trust complete strangers, like doctors and taxi drivers, to follow social rules and not take advantage of us or their passengers. Trust is a feeling, and it’s often based on past experiences and perceptions of current situations, including what we believe about the person or company we’re trusting. Trust can be a difficult thing to build, especially when you’ve been hurt in the past or have a negative view of a particular person or company.

A trust is a legal document that dictates how assets should be managed, distributed and transferred to beneficiaries during life or after death. Trusts can help estates avoid taxes and probate, protect assets from creditors, and provide for special needs beneficiaries. Trusts are complex documents that require careful review and planning. They can also be expensive to set up and maintain.

The most common type of trust is a revocable living trust. This allows the grantor to maintain control over the assets and ensures their proper management if they become incapacitated. A revocable trust can also be revoked during the grantor’s lifetime. However, a revocable trust does not protect the grantor’s assets from taxes or creditors.

To create a trust, you should start by talking to an attorney who has experience with trusts and estate planning. They will be able to explain the benefits of creating a trust and help you draft one that fits your situation. They should be able to coordinate with your financial and tax advisors, as well.

Once you’ve created a trust, the next step is to gather the assets that will be transferred into it. This can include cash, stocks, bonds, mutual funds and real estate. If you’re using a trust document template, the process should be fairly straightforward, but you will still need to verify the information and have it signed and notarized.

After that, the trustee can begin managing the trust assets. It’s important to keep a clear inventory of the assets in the trust, along with their current value and any fluctuations in their values. It’s also necessary to document all transactions and communications with the beneficiaries. Finally, you will need to make sure the trustee is up to date on any laws or regulations that apply to the trust and its assets.

Beneficiaries will receive distributions from the trust according to its terms. Depending on the trust’s terms, these could be annual earnings distributions or full distributions of the trust principal (“corpus”). Beneficiaries are also entitled to sue trustees for breach of trust if they don’t receive timely and accurate distributions. However, trustees can withhold distributions for a good reason, such as if they’re aware that a beneficiary has an addiction or is likely to spend the money irresponsibly.