TRUST

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Trust

Trusts arise from fiduciary relationships in which one party, the trustor, entrusts title to assets or property to another, the trustee, for the benefit of a third party, the beneficiary. In most cases, trusts are established to provide legal protection for the trustor's assets, to ensure their distribution according to the trustor's wishes, and to save time, reduce paperwork, and, in some instances, to avoid or reduce inheritance taxes. Trusts can also be public limited companies built to operate as closed-end funds.

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Key Takeaways


  • In a trust, one party, known as the trustor, gives another party, known as the trustee, authority to hold title to a third party's property.
  • Although trusts are generally associated with the rich and idle, they are extremely flexible instruments that can be used for a variety of purposes to achieve specific objectives.
  • There are six general categories of trusts: living, testamentary, funded, unfunded, revocable, and irrevocable.