Trusts can be set up for a variety of reasons. One common purpose for a trust is to hold funds for a minor child or relative who is physically or mentally handicapped. The trust can hold funds and invest. On a regular basis, the trust can pay an income to a trust beneficiary. The trustee's role is to maintain the trust and make decisions that are in the best interest of the beneficiary of the trust.
Trusts are also great vehicles for transfering assets out of large estates.
When a person dies, estate taxes are calculated based on the value of what they own at death. The trust, owning these assets, can then sell off the property and provide income to the deceased's beneficiarys. Or the trust can continue to hold the property indefinitely.