Trust

Quick Summary of Trust

Ancient legal practice where one person (the grantor) transfers the legal title to an asset, called the principle or corpus, to another person (the trustee), with specific instructions about how the corpus is to be managed and disposed.

In general, a trust is formed when the legal owner (or owners) (see: Trustee) is obliged to hold it for the benefit of some other person, or group of people (the ‘objects’, or beneficiaries; see: Object trust, Beneficiary). A trust may be formed when, for example, the beneficiary cannot legally own the property. Trusts can be loosely classed into four metas.

• An Express trust, intentionally created by a person out of his right of ownership
• A Resulting trust, arising by operation of law in connection with an express trust (e.g., where the express trust fails)
• A Constructive Trust, arising by operation of equity in a variety of other situations.
• A Statutory trust, which arises by virtue of the application of a particular statute

The trustee is the legal owner of the property, and has full legal rights of ownership. He can, for example, sell or raise a mortgage on the property. However, the equitable interest of the beneficiary is not disturbed, and the new owner of the property will take it subject to those interests (but see: Bonafide purchaser without notice).

A trust will generally impose some duties on the trustee if only a duty to allocate the proceeds to the beneficiaries. A duty may be personal, that is, offered to and accepted by a specific individual, or a Duty virtute officii.

In general, the trustee of an express trust has a fiduciary duty to the beneficiaries, and the beneficiaries can seek to enforce that duty in the courts.

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