Generally, trusts are established when the trustor (Party “A”) chooses to hand over the right or title to an asset to a trustee (Part “B”), who will them possess that asset and manage it for the benefit of a beneficiary (Party “C”). In most cases the asset being entrusted to the trustee will become over time their own personal possession (with full ownership rights), although sometimes the trustee remains merely the possessor.
For the most part, trustees are appointed to manage the asset, to distribute its profits or pass them to the beneficiary according to internal settlements decided on during the establishment of the trust.
The manner and methods of the trustees’ management are set forth in the trust contract that may be in the form of a deed of trust, a declaration of trust, or an agreement of trust. The trustee is obligated to act according to agreed conditions. Trusts can be formed through contracts and in some cases in by the behavior of the parties.
People are used to associating the concept of trusts with English common law and its principle of equity, but some claim that it harkens back much farther and is even mentioned in the Talmud.
Different countries have different kinds of trusts; for example, the Isle of Man accepts trust agreements in cases of life insurance, pensions, and in inheritance and others.
Assets given over to a trustee’s care may be tangible or intangible (such as intellectual property). The trust may be for public or private purposes, provide the trustee greater or lesser discretion, and may serve a single beneficiary.
Most trusts are established when beneficiaries choose to giver over care of assets to a trustee, and there are no restrictions on the type or quality of asset being entrusted.
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