Simple and Complex Trusts

A trust is legal arrangement where financial property is managed by one party for the benefit of another party. In a trust, the trustor entrusts some or all of their property to a group of trustees who hold a legal title to the trust property, but must hold the property for the benefit of other parties. There are numerous kinds of trusts, but whether a trust is “simple” or “complex” is a matter that applies to all trusts.

A simple trust is defined as a trust that must distribute all of its current income while distributing no principal. A complex trust, on the other hand, is defined as a trust that is not compelled to distribute any of its income and may distribute its principle. Simple trusts are commonly set up by a parents or other family members to provide for a child’s future financial well-being, while complex trusts are often set up for a specific purpose, such as to pay for a child’s education.

If you are considering making a trust a part of your estate, consulting with an experienced estate attorney can help you decide on which kind of trust is right for you and your beneficiaries.