What is a Trust?
A trust is no more than a relationship among three parties – a grantor, trustee and beneficiary concerning property. I. C. § 68-104(1) . The grantor transfers (or grants) to the trustee property (real or personal) for the trustee to hold and manage for the benefit of a third party – the beneficiary. The wording of the grant creates the relationship. For example, Bob gives “my red Corvette to Jim in trust for (or for the benefit of) my son, Rob." A trust has been created. Bob is the grantor. Jim is the trustee and the son, Rob, is the beneficiary. Therefore, Jim is to hold the bare legal title to the red Corvette and hold or manage it for the benefit of Rob.
While there are three parties to every trust – grantor, trustee and beneficiary – they don’t need to be separate individuals. For example, Bob could act as the grantor, trustee and the beneficiary. In the discussion below concerning estate planning trusts, this is often the case. Bob could also simply act as the grantor and the beneficiary, appointing another to be the trustee. As discussed below, this is fairly common in advanced estate planning and asset protection planning.
As noted above, the creation of a trust can be very simple. However, as in the example above, the instructions for the trustee are very basic “for the benefit of my son, Rob." Without more, it will be almost impossible for the trustee to know whether he or she is doing what the grantor intended. This becomes an issue if the beneficiary has a complaint about how the trustee is doing his or her job.
Parties to a Trust
There are three parties to a trust, the grantor (also known as trustor), the trustee and one or more beneficiaries. Each of these will be discussed in turn.
Individuals who have the capacity to enter into a contract can be the grantor of a trust.  The vast majority of trusts are created by private individuals.
An incapacitated individual can be the grantor of trust through the use of an appropriately worded power of attorney, the key being the wording of the power of attorney and the purpose of the trust. The statutory power of attorney found at I. C. § 15-12-301, allows for the agent to create a trust if that option is marked.  However, for Medicaid purposes, the Department of Health and Welfare will act to disregard trusts created through the use of a power of attorney unless that power of attorney specifically enumerates the type of trust created.
The court is often called on to create a trust and can act as a grantor. More often, however, the court is asked to approve a trust such as a trust used to hold assets recovered on behalf of a minor. I. C. § 68-1405. These “special needs" trusts can preserve assets while allowing a beneficiary to qualify for Medicaid assistance.
Since a trust is the private agreement among three parties, the grantor can appoint nearly anyone he chooses to serve as a trustee. See I. C. § 26-3205. This is not to say that he or she should appoint just anyone. Rather, great care should be taken in appointing a trustee. As noted above, the grantor can appoint herself to be the trustee. This is frequently done with revocable living trusts that are used for estate planning.
A grantor can also appoint more than one trustee. Co-trustees are often useful when they each have a special set of skills or when additional protection is needed. However, there are additional challenges with multiple trustees. Trustee instructions need to be carefully drafted to avoid these issues such as whether unanimous approval is required for actions of trustees or whether a majority vote will be enough. It is also possible to draft instructions for one trustee to make certain decisions and another trustee to make other types of decisions.
In many estate planning trusts, the grantors appoint themselves or a family member to act as trustee, often as co-trustee. This can have the advantage of the trustee being familiar with the grantor and a better understanding of the grantor's wishes. This can be a big advantage when the beneficiary is the grantor, perhaps at a time when the grantor no longer has the capacity to act for herself, or when the beneficiary is a family member with special or particular needs.
The use of family members as trustees, however, can also present a number of special challenges. Trustees are held to a strict standard of care both under the common law and by statute. I. C. § 15-7-302. Family members may or may not have the training necessary to fulfill that standard of care. Trust accounting issues are unique to the world of accounting and the income taxation of trusts and estates is particularly esoteric and complex. A parent should understand that appointing a child to be a trustee is not a favor and should not be done just to show the child that the grantor loves him.
These particular challenges can be overcome by appointing a professional to serve as a co-trustee, either a general co-trustee or in a more special role such as a distribution trustee. Professional trustees come in different flavors. I. C. § 26-3205. Many commercial banks have trust departments that are available to help as trustee or co-trustee. There are trust companies that are regulated by the state (Department of Finance). Their expertise and experience is administrating private trusts and they can also act either as the sole trustee or a co-trustee. Attorneys and CPAs can also act as trustees.
As noted above, there are many options for choosing a trustee. There is no one right choice for all trusts. Each situation is unique each decision is a case by case decision taking into account all of the factors.
Who can be a beneficiary? Certainly any legal “person" (individual or legal entity) can be a beneficiary. And while a certain level of mental capacity is required to be a trustee, no such capacity is necessary on the part of the beneficiary. In fact, the lack of capacity is often a compelling reason for creating a trust.
In estate planning situation, a grantor creates a trust with himself as the beneficiary. Should he become incapacitated, the trustee (or successor trustee) will continue the administration of the trust for the benefit of the grantor. This can obviate the need for a conservatorship proceeding since the assets are not technically owned by the incapacitated grantor and the grantor has previously appointed a trustee to manage the assets in his absence. (This is the same outcome concerning the need for probate. Since the assets are no longer in the name of the grantor, the probate proceeding is not needed to retitle the assets to the deceased’s heir. The successor trustee can retitle the trust assets into the name of the beneficiaries or retain in trust depending on the trust agreement’s instructions.)
Thus, an individual can be a beneficiary. More than one individual can be beneficiaries concurrently or consecutively. In an estate planning situation, this means that the grantor can be the current or primary beneficiary and his child or children (or grandchildren) can be the beneficiaries after his death.
A legal entity can be a beneficiary of a trust. Charitable entities are common beneficiaries of private trusts. For example, a grantor can name herself or her children to be the primary beneficiary and then a church, university or other charitable entity to be the contingent beneficiary.
In some situations involving Medicaid benefits, the Idaho Department of Health and Welfare must be named as the contingent beneficiary of the trust.
Title 68 of the Idaho Code reflects the effort of the state legislature to clarify a number of trust issues that have arisen through the years. Title 68 and Title 15, Chapter 7 of the Idaho Code are a good starting point for understanding Idaho law concerning trusts, trustees, administration of trusts, the responsibilities and liabilities of trustees and the rights of beneficiaries.
 Note, however, that while trust law and contract law have similarities, the body of trust law is distinct from the body of contract law. The indiscriminate application of principles of one to the other, while inviting, is also dangerous.
 A copy of the statutory Power of Attorney is attached.