Who owns the property in an irrevocable trust?

In an irrevocable trust, the property ownership is held by both the trustee and the beneficiaries. Here is how ownership works in that structure:

 

1. Grantor or Settlor: This refers to a person who forms an irrevocable trust by transferring assets into it. Once these assets are placed inside the trust, the grantor no longer has legal title to ownership or control over such property. The fact that the trust is to be irrevocable means the grantor cannot revoke, alter, or change the trust upon its execution. This constitutes another important form of relinquishment characteristic for irrevocable trusts which in turn creates potential benefits such as asset protection and reduction of estate taxes.
2. Trustee: A trustee can be a person or any legal entity a trust is assigned to for managing the assets of the trust. According to the letter of the law, a trustee owns the property of the trust, but he has to manage and dispose of the assets in accordance with the terms laid down in the agreement of the trust. He is duty-bound to act in the best interests of the beneficiaries and to follow instructions on the trust.
3. Beneficiaries: Beneficiaries are those who receive from the trust. Since they do not hold any legal title in the property, they are said to have equitable or beneficial ownership, indicating therein their right to the income or principal of the trust as specified under the trust agreement.

 

That is to say, the beneficiaries can claim the trust property only when the trustee has legally held it in possession. Once the trust relationship is formed-irrespective of the form that such a trust takes-the grantor permanently loses that ownership so that whatever assets are held in that trust may not be considered part of the grantor's estate at all. One Pacific Trust does an exceptional job in handling such trusts, making sure that the assets are managed with expertise, safe, and responsive to the grantor's specific wishes in safeguarding beneficiaries' interests.