Legal topics
Trusts, explained.
The three roles, the revocable/irrevocable distinction that matters most, and why trusts and companies are usually used together rather than as alternatives.
The three roles in every trust
Who is who
- Settlor (also grantor or trustor), the person who creates the trust and transfers property into it.
- Trustee: holds legal title and administers the property under the trust's terms. Owes fiduciary duties to the beneficiaries.
- Beneficiary: the person or people for whose benefit the property is held.
Almost everything that distinguishes one trust from another comes down to how those three roles are allocated and how much control the settlor keeps. That is also what determines the tax and creditor consequences, which is why trust drafting is legal work rather than form-filling.
Revocable versus irrevocable, the distinction that matters most
| Revocable | Irrevocable | |
|---|---|---|
| Can the settlor change or revoke it? | Yes, at any time | No, or only in narrow defined ways |
| Avoids probate? | Yes | Yes |
| Protection from the settlor's creditors | Generally none, still treated as the settlor's property | Potentially, depending on structure, jurisdiction, and timing |
| Estate tax treatment | Assets generally remain in the taxable estate | Assets may be removed from the taxable estate |
| Typical use | Probate avoidance and incapacity planning | Tax planning and creditor protection |
This is the point most often misunderstood. A standard revocable living trust is an excellent probate-avoidance and incapacity tool and does very little against creditors, precisely because you kept the power to undo it. Protection generally requires giving something up.
Common types, in one line each
What the names mean
- Revocable living trust: probate avoidance, incapacity planning, privacy of disposition.
- Irrevocable trust: the broad category used for estate tax and creditor planning.
- Domestic asset protection trust: a self-settled trust permitted by statute in a minority of states, where the settlor can also be a beneficiary.
- Offshore trust: established under the law of another jurisdiction, typically for the procedural obstacles a foreign forum creates.
- Dynasty trust: designed to hold wealth across multiple generations without a transfer tax at each one.
- Charitable trust: splits benefit between charitable and non-charitable beneficiaries.
- Land trust: holds title to real property, commonly for privacy of the record owner.
Which of these is appropriate is entirely fact-dependent, and several carry meaningful trade-offs in cost, control, and tax treatment. The firm publishes detail on trust administration and domestic asset protection.
Where entities meet trusts
In practice, trusts and companies are usually used together rather than as alternatives. A common pattern is a trust holding the membership interests of an LLC, which in turn holds the actual assets. The trust governs succession and ownership; the LLC governs operation and liability.
That pattern is exactly where our work sits. The trust is drafted by attorneys. The LLC beneath it has to be formed, given a registered agent, filed every year, and documented, indefinitely, because the structure fails the moment an entity in it lapses.
Where Tresp Corporate Services fits
What Tresp Corporate Services does here
Structures of this kind are built out of entities, and entities need forming, filing, and maintaining. That part is ours:
Our role
- Form the entities in Wyoming or California
- Act as registered agent in every state where an entity sits
- File the annual reports and keep each entity in good standing
- Maintain the minutes, resolutions, and records that evidence each entity is real and separate
- Provide mail forwarding and public record address service where the structure calls for it
We do not draft trusts, serve as trustee, or advise on which trust suits you. The design of the structure, and whether it suits you at all, is legal work performed by attorneys, not by us.
Information, not advice
This page explains a general legal concept so you can have a better-informed conversation. Tresp Corporate Services, LLC is not a law firm, does not provide legal advice, and forms no attorney-client relationship with you. Nothing here is a recommendation about your circumstances or a prediction about your outcome, nobody can offer either without knowing your facts. For advice on your situation, speak with the independent firm Tresp, Day & Associates, Inc. or counsel of your own choosing.
Need the entity beneath a trust formed or maintained?
We handle formation, registered agent, and compliance. For the legal question, we will point you to the firm.
Common questions
Frequently asked
What is a trust?
A trust is an arrangement in which a trustee holds legal title to property for the benefit of beneficiaries, under terms set by the settlor who created it. Trusts are used for probate avoidance, incapacity planning, estate tax planning, and creditor protection.
What is the difference between a revocable and an irrevocable trust?
A revocable trust can be changed or revoked by the settlor at any time; because the settlor retains that power, its assets are generally still treated as the settlor's for creditor and estate tax purposes. An irrevocable trust gives up that power, which is what makes creditor protection and removal from the taxable estate possible. Both avoid probate.
Does a living trust protect assets from creditors?
Generally not. A standard revocable living trust is a probate-avoidance and incapacity tool. Because the settlor can revoke it, the assets are typically still reachable. Creditor protection normally requires an irrevocable structure, and depends on jurisdiction and timing.
Can a trust own an LLC?
Yes, and it is a common arrangement. The trust holds the membership interests while the LLC holds and operates the assets. The trust governs succession and ownership; the LLC governs operation and liability. The LLC still requires a registered agent, annual filings, and maintained records.
Tresp Corporate Services, LLC provides corporate, registered-agent, and compliance services and does not provide legal advice. For legal matters, we work in tandem with the independent law firm Tresp, Day & Associates, Inc. This page is general information only.
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