trust

trust Click here for more free books!

1. Firm reliance on the integrity, ability, or character of a person or thing.
2. Custody; care.
3. Something committed into the care of another; charge.
4. 1. The condition and resulting obligation of having confidence placed in one: violated a public trust.
   2. One in which confidence is placed.
5. Reliance on something in the future; hope.
6. Reliance on the intention and ability of a purchaser to pay in the future; credit.
7. Law.
   1. A legal title to property held by one party for the benefit of another.
   2. The confidence reposed in a trustee when giving the trustee legal title to property to administer for another, together with the trustee's obligation regarding that property and the beneficiary.
   3. The property so held.
8. A combination of firms or corporations for the purpose of reducing competition and controlling prices throughout a business or an industry.

1. To have or place reliance; depend: Trust in the Lord. Trust to destiny.
2. To be confident; hope.
3. To sell on credit.

1. To have or place confidence in; depend on.
2. To expect with assurance; assume: I trust that you will be on time.
3. To believe: I trust what you say.
4. To place in the care of another; entrust.
5. To grant discretion to confidently: Can I trust them with the boat?
6. To extend credit to.

in trust

1. In the possession or care of a trustee.

[Middle English truste, perhaps from Old Norse traust, confidence.]

SYNONYMS   trust, faith, confidence, reliance, dependence. These nouns denote a feeling of certainty that a person or thing will not fail. Trust implies depth and assurance of feeling that is often based on inconclusive evidence: The mayor vowed to justify the trust the electorate had placed in him. Faith connotes unquestioning, often emotionally charged belief: "Often enough our faith beforehand in an uncertified result is the only thing that makes the result come true" (William James). Confidence, frequently implies stronger grounds for assurance: "Confidence is a plant of slow growth in an aged bosom: youth is the season of credulity" (William Pitt). Reliance connotes a confident and trustful commitment to another: "What reliance could they place on the protection of a prince so recently their enemy?" (William Hickling Prescott). Dependence suggests reliance on another to whom one is often subordinate: "When I had once called him in, I could not subsist without Dependence on him" (Richard Steele). See also synonyms at care, rely.

For more information on trust, visit Britannica.com.

(1) In directory services, a trust is the passing of the rights of one group to another. See trust relationship.

(2) A computer system that is secure. See trusted computer system.

(3) The belief that a document or message has not been tampered with and that it is coming from the person indicated and not forged in any manner. See digital signature.

Download Computer Desktop Encyclopedia to your iPhone/iTouch

A fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary.

There are two types of trusts:
1. Living Trust (inter-vivos): A trust that is in effect during the trustor's lifetime.
2. Testamentary Trust: A trust that is created through the will of a deceased person.

Investopedia Says:
For example, a trust can be used if a beneficiary is under age or has a mental disability that impairs the person's ability to maintain his or her own finances. Once the beneficiary is deemed able to manage the funds or assets by the terms dictated under the trust, the beneficiary will receive possession of the trust. The trust is taxed on any funds not distributed to the beneficiary.

Related Links:
Learn about a strategy that could help you reduce taxes, diversify your portfolio and generate income. Saving Money With A Private Annuity Trust
This arrangement allows you to have more control over your estate - both before and after your death. Establishing A Revocable Living Trust
Make sure the needs of baby boomers and their parents are met - if not exceeded. Providing For Older Clients
Life changes make it time to rewrite your plan's designations. Update Your Beneficiaries
Don't let bad estate planning lead to unnecessary costs and stress for your inheritors. Skipping-Out on Probate Costs
If you're a beneficiary of a retirement account, you should know your distribution options. Inherited Retirement Plan Assets - Part 1
Find out how to protect and provide for your pet after you pass away. Keep Your Pets' Trust
Don't trust the courts to follow your wishes - plan the distribution of your own assets. Why You Should Draft A Will

Business: type of corporate combination that engaged in monopolies and restraint of trade and that operated freely until the Antitrust Laws of the late 19th century and early 20th century. The name derived from the use of the voting trust, in which a small number of trustees vote a majority of the shares of a corporation. The voting trust survives as a means of facilitating the reorganization of firms in difficulty. See also Investment Company; Voting Trust Certificate.

Law: Fiduciary relationship in which a person, called a trustee, holds title to property for the benefit of another person, called a Beneficiary. The agreement that establishes the trust, contains its provisions, and sets forth the powers of the trustee is called the trust indenture. The person creating the trust is the creator, settlor, Grantor, or donor; the property itself is called the Corpus, trust res, trust fund, or trust estate, which is distinguished from any income earned by it. If the trust is created while the donor is living, it is called a living trust or Inter Vivos Trust. A trust created by a will is called a Testamentary Trust. The trustee is usually charged with investing trust property productively and, unless specifically limited, can sell, mortgage, or lease the property as he or she deems warranted. See also Charitable Remainder Trust; Clifford Trust; Investment Trust; Revisionary Trust; Trust Company; Trustee in Bankruptcy; Trust Indenture Act of 1939.

An arrangement whereby property is transferred to a trusted Third Party (trustee) by a Grantor (trustor). The Trustee holds the property for the benefit of another (beneficiary).

Example: An Inter Vivos trust was established by a living person who gave her warehouse to a trustee for the benefit of her children.
Example: A testamentary trust was established upon the death of a trustor, according to his Will.

noun

1. Absolute certainty in the trustworthiness of another: belief, confidence, dependence, faith, reliance. See belief/unbelief.
2. The function of watching, guarding, or overseeing: care, charge, custody, guardianship, keeping, superintendence, supervision. See care for/neglect.
3. A combination of businesses closely interconnected for common profit: cartel, combine, pool, syndicate. See group, money.

verb

1. To place trust or confidence in. bank on (or upon), believe in, count on (or upon), depend on (or upon), reckon on (or upon), rely on (or upon). See trust/distrust.
2. To have confidence in the truthfulness of: believe, credit. Idioms: take at one's word. See opinion.
3. To put in the charge of another for care, use, or performance: commend, commit, confide, consign, entrust, give (over), hand over, relegate, turn over. Idioms: give intrustcharge. See give/take/reciprocity.
4. To place a trust upon: charge, entrust. See trust/distrust.

Definition: belief in something as true, trustworthy
Antonyms: disbelief, distrust, mistrust

v

Definition: believe, place confidence in
Antonyms: disbelieve, distrust, mistrust

v

Definition: give to for safekeeping
Antonyms: hold, keep

The term "trust" derives from English common law. Not until the 1880s, however, with the rise of big business in the United States, did the modern definition of trust come into use.

In 1879, John D. Rockefeller, a rich industrialist and owner of Standard Oil, was facing a crisis. A self-made man who began his career as a bookkeeper at the age of sixteen, Rockefeller had built up Standard Oil through a system of mergers and acquisitions. A persistent entrepreneur, Rockefeller was involved in various industries, including the rapidly expanding railroads. By 1879 the New York State Legislature was looking into Rockefeller's dealings, specifically his railroad mergers, and when the investigation's findings were published in the Atlantic Monthly in 1881, public outcry made further mergers impossible.

Anxious to expand Standard Oil beyond Ohio, Rockefeller had been limited by antimonopoly laws and sentiment. Rockefeller, realizing that he was stymied after the legislative investigation and that he needed a change of direction, was intent on finding a backdoor to monopoly. His attorney, Samuel Dodd, provided the answer.

Dodd proposed the formation of a trust company, controlled by a board of nine trustees. This board would select directors and officers of component companies and would determine the dividends of the companies within the trust. Rather than acquiring companies directly, Rockefeller would instead control such companies indirectly via the trust. Such a form of corporate organization insured against a direct hierarchy with Rockefeller at the top; this legal technicality allowed Rockefeller to expand and continue to control his business. On 2 Jan uary 1882, the Standard Oil Trust became a reality, changing the face of big business.

As the U.S. economy expanded, so did the number of trusts, attracting such men as steel maker Andrew Carnegie, railroad tycoon Jay Gould, and financier J. P. Morgan. All would use the trust form to crush their competition and achieve monopolies in their industries.

Such concentration meant almost certain death for small businessmen and companies just getting started—they could not be competitive. The cry of "unfair" was quickly heard. Thomas Nast, the famous cartoonist who had exposed the corruption at Tammany Hall during the early 1870s, inflamed the public with caricatures of rich, powerful industrialists controlling everything from corn to Congress, while Muckrakers such as Ida M. Tarbell exposed the greed and power behind the Robber Barons. By 1888, popular antipathy toward the trusts made them a key issue in the presidential election. Both the Democratic candidate, Grover Cleveland, and the Republican, Benjamin Harrison, were forced to make a campaign promise to fight trusts. In a closely contested election, Harrison would receive fewer popular votes, but would win the electoral college and become president.

Sherman Antitrust Act

Eager to gain public support, Harrison was prepared to sign into law antitrust legislation. Congress responded with the Sherman Antitrust Act, named after Ohio senator John Sherman. The Senate passed the bill by 51 to 1 on 8 April 1890. The bill then went on to the House, where it was passed unanimously.

Section 1 of the bill stated that "every contract combination in the form of trust or otherwise, or conspiracy, in Restraint of Trade or commerce among the several States, or with foreign nations, is declared to be illegal." Section 2 extended the law to anyone who attempted to "monopolize any part of the trade or commerce among the several States, or with foreign nations." Violation was ordained a felony, with each violation punishable by a fine of $350,000 and up to three years in jail.

Unfortunately, the bill was poorly worded. The legislators had failed to define the terms "restraint of trade," "combination," and "monopolize." What was to be considered restraint of trade, and how to determine "good" trusts from "bad?" were some immediate questions. This Act was used throughout the 1890s to block strikes. Companies such as Pullman Palace Railcar maintained that unions were prohibited under the "conspiracy to restrict trade" clause. Accepting this argument, the federal government sent troops to put down the Pullman strike of 1892.

A further setback came in 1895, when the Supreme Court, in the case of United STates v. E. C. Knight Co. ruled that not all combinations constituted trusts that restrained interstate commerce, and such combinations could therefore not be prosecuted under the new law. The Court noted a distinct difference between commerce and manufacture, declaring that not all that is produced can be considered commerce. "Commerce succeeds to manufacture," the majority decision stated, "and is not a part of it … The fact that an article is manufactured for export to another state does not of itself make it an article of interstate commerce, and the intent of the manufacturer does not determine the time when the article or product passes from the control of the state and belongs to commerce." This decision implied that Congress did not have a right to control all products manufactured, since the simple manufacturing of a product did not make it "interstate commerce" and weakened the already ineffectual Interstate Commerce Commission.

The 1896 presidential campaign again brought the need for reform to the forefront. William Jennings Bryan, the popular orator and Democratic candidate for president, compared the rich industrialists to hogs. "As I was riding along," he declared, "I noticed these hogs rooting in a field, and they were tearing up the ground, and the first thought that came to me was that they were destroying a good deal of property. And that carried me back to the time when as a boy I lived upon a farm, and I remembered that when we had hogs we used to put rings in the noses of the hogs, and the thought came to me, 'Why did we do it?' Not to keep the hogs from getting fat. We were more interested in their getting fat than they were. The sooner they got fat the sooner we killed them; the longer they were in getting fat the longer they lived. But why were the rings put in the noses of those hogs? So that, while they were getting fat, they would not destroy more property than they were worth."

Bryan was not a socialist, but he did not want the Rockefellers, the Goulds, and the Morgans taking more than their share by way of muddy legal maneuvers. His opponent, William McKinley, meanwhile, received large donations from industrialist supporters, enabling his campaign to spend at least $4 million, a tremendous sum at the time. Some called this bribery, but Rockefeller and other industrialists insisted that they had a right to contribute money to candidates who supported their ideas. McKinley won the election by a comfortable margin, and the issue of trusts and monopolies seemed to be put on the backburner, especially with the advent of the Spanish-American War in 1898. McKinley was reelected in 1900; serious trust reform, it seemed, would have to wait. But McKinley's assassination in September 1901 brought Theodore Roosevelt into the White House.

Trust-Busters

Roosevelt, the "Hero of San Juan Hill" and former governor of New York, where he was outspoken in his criticisms of government policy toward business, quickly took big business to task, attacking the trusts and the newer "holding companies." Five months into Roosevelt's term, Morgan gave him the perfect opportunity to show his mettle when the financier formed the Northern Securities Company. The Northern Securities Company was a $4 million combination of all major groups competing for rail traffic in the northwest, including Rockefeller. Morgan thought that he would be able to negotiate with Roosevelt, even going so far as to suggest that "his man" meet with Roosevelt's "man" (Attorney General Philander C. Knox) to settle the matter.

Roosevelt was not interested in Morgan's negotiations. Instead, in 1902 he ordered Knox to bring suit against Northern Securities for violation of the Sherman Antitrust Act. The case went to the Supreme Court, and in a split five-to-four decision in Northern Securities Co. v. United States (1904), the Court sided with Roosevelt, proclaiming, "Congress has authority to declare, and by the language of its act, as interpreted in prior cases, has, in effect, declared, that the freedom of interstate and international commerce shall not be obstructed or disturbed by any combination, conspiracy, or Monopoly that will restrain such commerce, by preventing the free operation of competition among interstate carriers engaged in the transportation of passengers of freight."

Roosevelt's challenge of Northern Securities quickly gained him popularity as a "trustbuster." The wave of support for Roosevelt forced Congress to create a Bureau of Corporations in the Department of Commerce and Labor to investigate the activities of corporations. Congress also passed the Elkins Act of 1903, which outlawed rebates to large shippers and increased the powers of the Interstate Commerce Commission. Although he preferred to regulate corporations rather than "bust" them, Roosevelt went on to file forty-three more antitrust suits. His successor, William Howard Taft, filed sixty-five suits against trusts; Taft is rarely given credit for his vigorous enforcement activities.

The robber barons were losing ground. In Standard Oil Co. v. United States (1911), a case pushed strongly by the Taft administration, the Supreme Court ruled that Rockefeller's Standard Oil combination had to be dissolved; the Court, however, left a small loophole that would later prove crucial in allowing some combinations, including U.S. Steel, to survive. The Court invoked a "Rule of Reason," declaring that the restraint upon trade must be "undue" or "unreasonable." As long as their tactics were not "unreasonable," the alleged robber barons could proceed.

In 1914, during the presidency of Woodrow Wilson, Congress passed the Clayton Antitrust Act; this Act prohibited mergers and acquisitions that tended to "substantially…lessen competition, or … to create a monopoly." The Act also outlawed the "interlocking" of corporate executives on boards of companies issuing more than $1 million in stocks and bonds, and forbade stock purchases and price discriminations in which the intent was to limit competition. Labor unions were exempted from these restrictions, and Congress included provisions for labor's right to strike.

That same year, the Federal Trade Commission (FTC) was created to replace the Bureau of Corporations. The FTC was granted the authority to investigate corporate activities and to make rulings on unfair monopolistic business practices; it was further empowered to regulate advertising and to keep Congress and the public informed of the efficiency of antitrust legislation.

The Depression and the New Deal brought more antitrust legislation. In 1934 Congress created the Securities and Exchange Commission to protect investors from "rags to riches" schemes and maintain the integrity of the securities market.

In 1936, the Robinson-Patman Act was passed. Its purpose was to protect small businessmen who were trying to get back into the market. While many small businesses had been wiped out by the Depression, most of the larger ones had managed to stay afloat. It was widely feared that these companies might expand in such bad times and use methods such as price discrimination to stifle competition. Robinson-Patman forbade firms involved in interstate commerce to engage in price discrimination when the effect would be to lessen competition or to create a monopoly. (This law is frequently referred to as the "Anti-Chain Store Act," as it has often been applied to them.) Through the 1940s and 1950s, the government would continue trust-busting activities. In 1969, the government filed suit against IBM, the corporate giant; the suit dragged on for thirteen years before the case was dismissed. By then IBM's business was threatened by personal computers and networked office systems. Many critics of antitrust legislation declared government intervention pointless, noting that technology is often its own safeguard against monopoly. In 1973, however, the government would succeed in forcing giant AT&T to dissolve.

During the late twentieth and early twenty-first centuries, the government engaged in a massive antitrust lawsuit against Microsoft, the computer-programming giant. The FTC began its attempt to dismantle Microsoft in 1989, accusing the company and its officers of engaging in price discrimination and claiming that the company deliberately placed programming codes in its operating systems that would hinder competition. Microsoft responded by changing its royalty policy. In 1997 Microsoft would come to trial once again, with the Department of Justice claiming that the company violated Sections 1 and 2 of the Sherman Antitrust Act. The case stemmed from the fact that Microsoft's Windows® program required consumers to load Microsoft's Internet browser, giving Microsoft a monopolistic advantage over other browser manufacturers. Microsoft claimed that this was a matter of quality service, not of monopoly. Microsoft claimed that it had produced a superior, more compatible product and that its intent was not to restrict commerce. In late 1999, the judge hearing the case ruled that Microsoft was, in fact, a monopoly and should be broken up. Two years later, in July 2001, an Appeals Court found that Microsoft had acted illegally but reversed the lower court ruling ordering a breakup.

Bibliography

Abels, Jules. The Rockefeller Billions: The Story of the World's Most Stupendous Fortune. New York: MacMillan, 1965.

Brands, H. W. TR: The Last Romantic. New York: Basic Books, 1997.

Chernow, Ron. The Death of the Banker: The Decline and Fall of the Great Financial Dynasties and the Triumph of the Small Investor. New York: Vintage Books, 1997.

Garraty, John A. Theodore Roosevelt: The Strenuous Life. New York: American Heritage Publishing, 1967.

Geisst, Charles R. Monopolies in America: Empire Builders and their Enemies, from Jay Gould to Bill Gates. New York: Oxford University Press, 2000.

Laughlin, Rosemary. John D. Rockefeller: Oil Baron and Philanthropist. Greensboro, N.C.: Morgan Reynolds, 2001.

Tompkins, Vincent, ed. "Headline Makers." In American Eras: Development of the Industrial United States, 1878–1899. Detroit, Mich.: Gale Research, 1997.

Wheeler, George. Pierpont Morgan and Friends: The Anatomy of a Myth. Englewood Cliffs, N.J.: Prentice-Hall, 1973.

A relationship created at the direction of an individual, in which one or more persons hold the individual's property subject to certain duties to use and protect it for the benefit of others.

Individuals may control the distribution of their property during their lives or after their deaths through the use of a trust. There are many types of trusts and many purposes for their creation. A trust may be created for the financial benefit of the person creating the trust, a surviving spouse or minor children, or a charitable purpose. Though a variety of trusts are permitted by law, trust arrangements that are attempts to evade creditors or lawful responsibilities will be declared void by the courts.

The law of trusts is voluminous and often complicated, but generally it is concerned with whether a trust has been created, whether it is a public or private trust, whether it is legal, and whether the trustee has lawfully managed the trust and trust property.

Basic Concepts

The person who creates the trust is the settlor. The person who holds the property for another's benefit is the trustee. The person who is benefited by the trust is the beneficiary, or cestui que trust. The property that comprises the trust is the trust res, corpus, principal, or subject matter. For example, a parent signs over certain stock to a bank to manage for a child, with instructions to give the dividend checks to him each year until he becomes twenty-one years of age, at which time he is to receive all the stock. The parent is the settlor, the bank is the trustee, the stock is the trust res, and the child is the beneficiary.

A fiduciary relationship exists in the law of trusts whenever the settlor relies on the trustee and places special confidence in her. The trustee must act in good faith with strict honesty and due regard to protect and serve the interests of the beneficiaries. The trustee also has a fiduciary relationship with the beneficiaries of the trust.

A trustee takes legal title to the trust res, which means that the trustee's interest in the property appears to be one of complete ownership and possession, but the trustee does not have the right to receive any benefits from the property. The right to benefit from the property, known as equitable title, belongs to the beneficiary.

The terms of the trust are the duties and powers of the trustee and the rights of the beneficiary conferred by the settlor when he created the trust.

State statutes and court decisions govern the law of trusts. The validity of a trust of real property is determined by the law of the state where the property is located. The law of the state of the permanent residence (domicile) of the settlor frequently governs a trust of personal property, but courts also consider a number of factors — such as the intention of the settlor, the state where the settlor lives, the state where the trustee lives, and the location of the trust property — when deciding which state has the greatest interest in regulating the trust property.

As a general rule, personal property can be held in a trust created orally. Express trusts of real property, however, must be in writing to be enforced. When a person creates a trust in his will, the resulting testamentary trust will be valid only if the will itself conforms to the requirements of state law for wills. Some states have adopted all or part of the Uniform Probate Code, which governs both wills and testamentary trusts.

Private Trusts

An express trust is created when the settlor expresses an intention either orally or in writing to establish the trust and complies with the required formalities. An express trust is what people usually mean when they refer to a trust.

Every private trust consists of four distinct elements: an intention of the settlor to create the trust, a res or subject matter, a trustee, and a beneficiary. Unless these elements are present, a court cannot enforce an arrangement as a trust.

Intention

The settlor must intend to impose enforceable duties on a trustee to deal with the property for the benefit of another. Intent can be demonstrated by words, conduct, or both. It is immaterial whether the word trust is used in the trust document. Sometimes, however, the words used by the settlor are equivocal and there is doubt whether the settlor intended to create a trust. If the settlor uses words that express merely the desire to do something, such as the terms desire, wish, or hope, these precatory words (words expressing a wish) may create a moral obligation, but they do not create a legal one. In this situation a court will consider the entire document and the circumstances of the person who attempted to create the trust to determine whether a trust should be established.

The settlor must intend to create a present trust. Demonstrating an intent to create a trust in the future is legally ineffective. When a settlor does not immediately designate the beneficiary, the trustee, or the trust property, a trust is not created until the designations are made.

Res or Subject Matter

An essential element of every trust is the trust property or res. Property must exist and be definite or definitely ascertainable at the time the trust is created and throughout its existence. Although stocks, bonds, and deeds are the most common types of trust property, any property interest that can be freely transferred by the settlor can be held in trust, including patents, copyrights, and trademarks. A mere expectancy — the anticipation of receiving a gift by will, for example — cannot be held in trust for another because no property interest exists at that time.

If the subject matter of a trust is totally destroyed, the trust ends. The beneficiary might have a claim against the trustee for breach of trust, however, if the trustee was negligent in failing to insure the trust property. If insurance proceeds are paid as a result of the destruction, the trust should be administered from them.

Trustee

Any person who has the legal capacity to take, hold, and administer property for her own use can take, hold, and administer property in trust. Nonresidents of the state in which the trust is to be administered can be trustees. State law determines whether an alien can act as a trustee.

A corporation can act as a trustee. For example, a trust company is a bank that has been named by a settlor to act as trustee in managing a trust. A partnership can serve as a trustee if state law permits. An unincorporated association, such as a labor union or social club, usually cannot serve as a trustee.

The United States, a state, or a municipal corporation can take and hold property as trustee. This arrangement usually occurs when a settlor creates a trust for the benefit of a military academy or a state college, or when the settlor sets aside property as a park for the community.

The failure of a settlor to name a trustee does not void a trust. The court appoints a trustee to administer the trust and orders the person having legal title to the property to convey it to the appointed trustee.

If two or more trustees are appointed, they always hold the title to trust property in joint tenancy with the right of survivorship. If one joint tenant dies, the surviving joint tenant inherits the entire interest, not just her proportionate share.

A trustee cannot resign without the permission of the court unless the trust instrument so provides or unless all of the beneficiaries who are legally capable to do so consent to the resignation. The court usually permits the trustee to resign if continuing to serve will be an unreasonable burden for the trustee and the resignation will not be greatly detrimental to the trust.

The removal of a trustee is within the discretion of the court. A trustee can be removed for habitual drunkenness, dishonesty, incompetency in handling trust property, or the dissipation of the trustee estate. Mere friction or incompatibility between the trustee and the beneficiary is insufficient, however, to justify removal unless it endangers the trust property or makes the accomplishment of the trust impossible.

Beneficiary

Every private trust must have a designated beneficiary or one so described that his identity can be learned when the trust is created or within the time limit of the rule against perpetuities, which is usually measured by the life of a person alive or conceived at the time the trust is created plus twenty-one years. This rule of law, which varies from state to state, is designed to prevent a person from tying up property in a trust for an unlimited number of years.

A person or corporation legally capable of taking and holding legal title to property can be a beneficiary of a trust. Partnerships and unincorporated associations can also be beneficiaries. Unless restricted by law, aliens can also be beneficiaries.

A class of persons can be named the beneficiary of a trust as long as the class is definite or definitely ascertainable. If property is left in trust for "my children," the class is definite and the trust is valid. When a trust is designated "for my family," the validity of the trust depends on whether the court construes the term to mean immediate family — in which case the class is definite — or all relations. If the latter is meant, the trust will fail because the class is indefinite.

When an ascertainable class exists, a settlor may grant the trustee the right to select beneficiaries from that class. However, a trust created for the benefit of any person selected by the trustee is not enforceable.

If the settlor's designation of an individual beneficiary or a class of beneficiaries is so vague or indefinite that the individual or group cannot be determined with reasonable clarity, the trust will fail.

The beneficiaries of a trust hold their equitable interest as tenants in common unless the trust instrument provides that they shall hold as joint tenants. For example, three beneficiaries each own an undivided one-third of the equitable title in the trust property. If they take as tenants in common, upon their deaths their heirs will inherit their proportionate shares. If, however, the settlor specified in the trust document that they are to take as joint tenants, then upon the death of one, the two beneficiaries will divide his share. Upon the death of one of the remaining two, the lone survivor will enjoy the complete benefits of the trust.

Creation of Express Trusts

To create an express trust, the settlor must own or have power of attorney over the property that is to become the trust property or must have the power to create such property. The settlor must be legally competent to create a trust.

A trust cannot be created for an illegal purpose, such as to defraud creditors or to deprive a spouse of her rightful elective share. The purpose of a trust is considered illegal when it is aimed at accomplishing objectives contrary to public policy. For example, a trust provision that encourages divorce, prevents a marriage, or violates the rule against perpetuities generally will not be enforced.

If the illegal provision pertains to the whole trust, the trust fails in its entirety. If, however, it does not affect the entire trust, only the illegal provision is stricken, and the trust is given effect without it.

Methods of Creation

A trust may be created by an express declaration of trust, a transfer in trust made either during a settlor's lifetime or under her will, an exercise of the power of appointment, a contractual arrangement, or statute. The method used for creating the trust depends on the relationship of the settlor to the property interest that is to constitute the trust property.

Declaration of Trust

A trust is created by a declaration of trust when the owner of property announces that she holds it as a trustee for the benefit of another. There is no need for a transfer because the trustee already has legal title. An oral declaration is usually sufficient to transfer equitable title to personal property, but a written declaration is usually required with respect to real property.

Trust Transfers

A trust is created when property is transferred in trust to a trustee for the benefit of another or even for the benefit of the settlor. Legal title passes to the trustee, and the beneficiary receives equitable title in the property. The settlor has no remaining interest in the property. A transfer in trust can be executed by a deed or some other arrangement during the settlor's lifetime. This is known as an inter vivos trust or living trust.

Powers of Appointment

A power of appointment is the right that one person, called the donor, gives in a deed or a will to another, the donee, to " appoint" or select individuals, the appointees, who should benefit from the donor's will, deed, or trust. A person holding a general power of appointment can create a trust according to the donor's direction by appointing a person as trustee to hold the trust property for anyone, including herself or her estate. If that person holds a special power of appointment, she can appoint only among particular persons and cannot appoint herself.

Contracts

Trusts can be created by various types of contractual arrangements. For example, a person can take out a life insurance policy on his own life and pay the premiums on the policy. The insurer, in return, promises to pay the proceeds of the policy to an individual who is to act as a trustee for an individual named by the insured. The trustee is given the duty to support the beneficiary of this trust from the proceeds during the beneficiary's life. The insured as settlor creates a trust by entering into a contract with the insurance company in favor of a trustee. The trust, called an insurance trust, is created when the insurance company issues its policy.

Statute

Statutes provide for the creation of trusts in various instances. In the case of wrongful death, statutes often provide that a right of action exists in the surviving spouse or executor or administrator of the decedent with any recovery held in trust for the designated beneficiaries.

Protection of Beneficiary's Interest from Creditors

Various trust devices have been developed to protect a beneficiary's interest from creditors. The most common are spendthrift trusts, discretionary trusts, and support trusts. Such devices safeguard the trust property while the trustee retains it. Once funds have been paid to the beneficiary, however, any attempt at imposing restraint on the transferability of his interest is invalid.

Spendthrift Trusts

A spendthrift trust is one in which, because of either a direction of the settlor or statute, the beneficiary is unable to transfer his right to future payments of income or capital, and creditors are unable to obtain the beneficiary's interest in future distributions from the trust for the payment of debts. Such trusts are ordinarily created with the aim of providing a fund for the maintenance of another, known as the spendthrift, while at the same time protecting the trust against the beneficiary's shortsightedness, extravagance, and inability to manage his financial affairs. Such trusts do not restrict creditors' rights to the property after the beneficiary receives it, but the creditors cannot compel the trustee to pay them directly.

The majority of states authorize spendthrift trusts. Those that do not will void such provisions so that the beneficiary can transfer his rights and creditors can reach the right to future income.

Discretionary Trusts

A discretionary trust authorizes the trustee to pay to the beneficiary only as much of the income or capital of the trust as the trustee sees fit to use for that purpose, with the remaining income or capital reserved for another purpose. This discretion allows the trustee to give the beneficiary some benefits under the trust or to give her nothing. The beneficiary cannot force the trustee to use any of the trust property for the beneficiary's benefit. Such a trust gives the beneficiary no interest that can be transferred or reached by creditors until the trustee has decided to pay or apply some of the trust property for the beneficiary.

Support Trusts

A trust that directs that the trustee shall pay or apply only so much of the income and principal as is necessary for the education and support of a beneficiary is a support trust. The interest of the beneficiary cannot be transferred. Paying money to an assignee of the beneficiary or to creditors would defeat the objectives of the trust. Support trusts are used, for the most part, in jurisdictions that prohibit spendthrift trusts.

Charitable Trusts

The purpose of a charitable trust is to accomplish a substantial social benefit for some portion of the public. The law favors charitable trusts by according them certain privileges, such as an advantageous tax status. Before a court will enforce a charitable trust, however, it must examine the alleged charity and evaluate its social benefits. The court cannot rely on the settlor's view that the trust is charitable.

To be valid, a charitable trust must meet certain requirements. The settlor must have the intent to create a charitable trust, there must be a trustee to administer the trust, which consists of some trust property, and the charitable purpose must be expressly designated. The beneficiary must be a definite segment of the community composed of indefinite persons. Selected persons within the class must actually receive the benefit. The requirements of intention, trustee, and res in a charitable trust are the same as those in a private trust.

Charitable Purpose

A charitable purpose is one that benefits, improves, or uplifts humankind mentally, morally, or physically. The relief of poverty, the improvement of government, and the advancement of religion, education, or health are some examples of charitable purposes.

Beneficiaries

The class to be benefited in a charitable trust must be a definite segment of the public. It must be large enough so that the community in general is affected and has an interest in the enforcement of the trust, yet it must not include the entire human race. Within the class, however, the specific persons to benefit must be indefinite. A trust "for the benefit of orphans of veterans of the 1991 Gulf War" is charitable because the class or category of beneficiaries is definite. The indefinite persons within the class are the individuals ultimately selected by the trustee to receive the provided benefit.

A trust for designated persons or a trust for profit cannot be a charitable trust. A trust to "erect and maintain a hospital" might be charitable even though the hospital charges the patients who are served, provided that any profits are used solely to continue the charitable services of the hospital.

As a general rule, a charitable trust may last forever, unlike a private trust. In a private trust, the designated beneficiary is the proper person to enforce the trust. In a charitable trust, the state attorney general, who represents the public interest, is the proper person to enforce the trust.

Cy Pres Doctrine

The doctrine of cy pres, taken from the phrase cy pres comme possible (French for "as near as possible"), refers to the power of a court to change administrative provisions in a charitable trust when the settlor's directions hinder the trustee in accomplishing the trust purpose. A court also has the power under the cy pres doctrine to order the trust funds to be applied to a charitable purpose other than the one named by the settlor. This will occur if it has become impossible, impractical, or inexpedient to accomplish the settlor's charitable purpose. Because a charitable trust can last forever, many purposes become obsolete because of changing economic, social, political, or other conditions. For example, a trust created in 1930 to combat smallpox would be of little practical value today because medical advances have virtually eliminated the disease. When the cy pres doctrine is applied, the court reasons that the settlor would have wanted her general charitable purposes implemented despite the changing conditions.

The cy pres doctrine can be applied only by a court, never by the trustees of the trust, who must execute the terms of the trust. Trustees can apply to the court, however, for cy pres instructions when they believe that the trust arrangements warrant it.

Management

The terms of a trust instrument, when a writing is required, or the statements of a settlor, when she creates a trust, set specific powers or duties that the trustee has in administering the trust property. These express powers, which are unequivocal and directly granted to the trustee, frequently consist of the power to sell the original trust property, invest the proceeds of any property sold, and collect the income of the trust property and pay it to the beneficiaries. The trustee also has implied powers that the settlor is deemed to have intended because they are necessary to fulfill the purposes of the trust.

A settlor can order the trustee to perform a certain act during the administration of the trust, such as selling trust realty as soon as possible and investing the proceeds in bonds. This power to sell is a mandatory or an imperative power. If the trustee fails to execute this power, he has committed a breach of trust. The beneficiary can obtain a court order compelling the trustee to perform the act, or the court can order the trustee to pay damages for delaying or failing to use the power. The court can also remove the trustee and appoint one who will exercise the power.

Courts usually will not set aside the decision of a trustee as long as the trustee made the decision in good faith after considering the settlor's intended purpose of the trust and the circumstances of the beneficiaries. A court will not tell a trustee how to exercise his discretionary powers. It will only direct the trustee to use his own judgment. If, however, the trustee refuses to do so or does so in bad faith or arbitrarily, a beneficiary can seek court intervention.

A trustee, as a fiduciary, must administer the trust with the skill and prudence that any reasonable and careful person would use in conducting her own financial affairs. The trustee's actions must conform to the trust purposes. Failure to act in this manner will render a trustee liable for breach of trust, regardless of whether she acted in good faith.

A trustee must be loyal to the beneficiaries, administering the trust solely for their benefit and to the exclusion of any considerations of personal profit or advantage. A trustee would violate her fiduciary duty and demonstrate a conflict of interest if, for example, she sold trust property to herself.

A trustee has the duty to defend the trust and the interests of the beneficiaries against baseless claims that the trust is invalid. If the claim is valid, however, and it would be useless to defend against such a challenge, the trustee should accede to the claim to avoid any unnecessary waste of property.

Trust property must be designated as such and segregated from a trustee's individual property and from property the trustee might hold in trust for others. This requirement enables a trustee to properly maintain the property and allows the beneficiary to easily trace it in the event of the trustee's death or insolvency.

Generally, a trustee is directed to collect and distribute income and has the duty to invest the trust property in income-producing assets as soon as is reasonable. This duty of investment is controlled by the settlor's directions in the trust document, court orders, the consent of the beneficiaries, or statute. Some states have statutes that list various types of investments that a trustee may or must make. Such laws are known as legal list statutes.

One of the principal duties of a trustee is to make payments of income and distribute the trust principal according to the terms of the trust, unless otherwise directed by a court. Unless a settlor expressly reserves such power when creating the trust, she cannot modify its payment provisions. In addition, the trustee cannot alter the terms of payment without obtaining approval of all the beneficiaries. Courts are empowered to permit the trustee to deviate from the trust terms with respect to the time and the form of payment, but the relative size of the beneficiaries' interests cannot be changed. If a beneficiary is in dire need of funds, courts will accelerate the payment. This is called "hastening the enjoyment."

Revocation or Modification

The creation of a trust is actually a conveyance of the settlor's property, usually as a gift. A trust cannot be cancelled or set aside at the option of the settlor should the settlor change his mind or become dissatisfied with the trust, unless the trust instrument so provides. If the settlor reserves the power to revoke or modify only in a particular manner, he can do so only in that manner. Otherwise, the revocation or modification can be accomplished in any manner that sufficiently demonstrates the settlor's intention to revoke or modify.

Termination

The period of time for which a trust is to operate is usually expressly prescribed in the trust instrument. A settlor can state that the trust shall last until the beneficiary reaches a particular age or until the beneficiary marries. When this period expires, the trust ends.

When the duration of a trust is not expressly fixed, the basic rule is that a trust will last no longer than necessary for the accomplishment of its purpose. A trust to educate a person's grandchildren would terminate when their education is completed. A trust also concludes when its purposes become impossible or illegal.

When all the beneficiaries and the settlor join in applying to the court to have the trust terminated, it will be ended even though the purposes that the settlor originally contemplated have not been accomplished. If the settlor does not join in the action, and if one or more of the purposes of the trust can still be attained by continuing the trust, the majority of U.S. courts refuse to grant a decree of termination. Testamentary trusts cannot be terminated.

See: honorary trust; resulting trust; Vidal v. Girard's Executors.

A combination of firms or corporations for the purpose of reducing competition and controlling prices throughout a business or industry. Trusts are generally prohibited or restricted by antitrust legislation. (Compare monopoly.)

n.

In American politics, a large corporation composed in greater part of thrifty working men, widows of small means, orphans in the care of guardians and the courts, with many similar malefactors and public enemies.

Quotes:

"Trust is the lubrication that makes it possible for organizations to work." - Warren Bennis

"Though he slay me, I shall yet trust Him." - Bible

"Trust in the Lord with all your heart; and don't lean on your own understanding. In all things acknowledge him, and he shall direct your way. [Proverbs 3:5, 6]" - Bible

"Build a little fence of trust around today; Fill the space with loving deeds, And therein stay. Look not through the sheltering bars Upon tomorrow; God will help thee bear what comes of joy and sorrow." - Mary F. Butts

"The man who trusts men will make fewer mistakes that he who distrusts them." - Camillo Benso Conte Di Cavour

"I cannot give them my confidence; pardon me, gentlemen, confidence is a plant of slow growth in an aged bosom: youth is the season of credulity." - William Pitt The Elder, Lord Chatham

See more famous quotes about Trust

Look up trust in Wiktionary, the free dictionary.

Trust may refer to:

• Trust (social sciences), reliance on another person or entity

Contents 1 Business and legal 2 Music 3 Fiction 4 Other uses

Business and legal

• Trust (law), an arrangement in which property is managed by one person or entity for the benefit of another
• Trust (19th century), a business entity formed to create a monopoly or fix prices
• Massachusetts business trust, a type of company also called an unincorporated business organization
• Investment trust, a collective investment fund
• Trust company, a financial institution offering certain services

Music

• Trust (band), a French rock group formed in 1977
• Trust (Belgian band), a pop group formed in 2007
• Trust Company (band), an American grunge band
• Trust (Elvis Costello album)
• Trust (Low album)
• Trust (Saga album)
• "Trust" (Keyshia Cole and Monica song)
• "Trust" (Ayumi Hamasaki song)
• "Trust" (Megadeth song)
• "Trust", a song by The Cure on the album Wish
• "Trust", a song by Thrice on the album The Illusion of Safety

Fiction

• Trust (TV series)
• Trust (film), a 1990 film
• The Trust (1915 film)
• Trust (100 Bullets)
• The Trust, a fictional entity in the Stargate franchise

Other uses

• Trust (electronics company)
• Trust, North Carolina, United States
• TRUST, a computer system for tracking trains
• NHS trust, a public health organization
• Trust Company Ltd., a car parts company
• Trust Operation, a Soviet counter-intelligence operation
• Trust metric, a measurement of the degree to which group members trust each other, as in online networking
• Trusted system, a computerized system relied on to enforce a security policy
• Web of trust, a system used in cryptography to establish authenticity

This disambiguation page lists articles associated with the same title. If an internal link led you here, you may wish to change the link to point directly to the intended article.

This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)

Dansk (Danish)
n. - tillid, tiltro, betroet hverv, sammenslutning, tro, forvaltning, betroet formue, trust
v. intr. - være tillidsfuld
v. tr. - stole på, have tillid til, betro, tro

idioms:

• in trust    i forvaring, forvalte
• on trust    på kredit
• take on trust    tro på noget uden at forlange bevis
• trust company    forvaltnings- eller investeringsforening
• trust fund    investeringsfond
• trust hospital    sygehus (British National Health Services)
• trust territory    formynderskabsområde

Nederlands (Dutch)
vertrouwen (op), toevertrouwen, veronderstellen, geloven, hopen, verantwoordelijk- heid, vertrouwen, hoop, trust, kartel, toevertrouwd goed

Français (French)
n. - confiance, (Jur) fidéicommis, (Fin) trust, (Fin) société d'investissement
v. intr. - faire confiance à, croire en
v. tr. - se fier à, faire confiance à, confier qch à qn, espérer (que)

idioms:

• in trust    (Jur) (tenir qch) par fidéicommis
• on trust    (croire) sur parole
• take on trust    croire sur parole
• trust company    société fiduciaire
• trust fund    fonds en fidéicommis
• trust territory    territoire sous tutelle

Deutsch (German)
n. - Vertrauen, Zuversicht, Verpflichtung, das Anvertraute, Trust, Stiftung, Treuhand, Kredit, Verwahrung
v. - trauen, vertrauen, hoffen, anvertrauen, Kredit einräumen

idioms:

• in trust    treuhänderisch, in Obhut
• on trust    auf Kredit, auf Treu und Glauben
• take on trust    einfach glauben
• trust company    Treuhandgesellschaft
• trust fund    Treuhandvermögen
• trust territory    Territorium unter Treuhandschaft (der UN o.ä.)

Ελληνική (Greek)
n. - εμπιστοσύνη, πίστη, (οικον.) κοινοπραξία, τραστ, (νομ.) παρακαταθήκη, ίδρυμα, φορέας, οργανισμός
v. - εμπιστεύομαι, έχω την πεποίθηση (πως), πιστεύω (πως), ευελπιστώ, ελπίζω

idioms:

• in trust    (νομ.) ως καταπίστευμα
• on trust    ανεξέταστα, ανεξέλεγκτα, επί πιστώσει, με πίστωση
• take on trust    δέχομαι καλόπιστα
• trust company    (οικον.) (ΗΠΑ) εταιρία διαχείρισης κεφαλαίων για λογαριασμό τρίτων
• trust fund    υποθήκη (χρημάτων)
• trust hospital    (Βρετ.) αυτοδιοικούμενο νοσοκομείο
• trust territory    περιοχή ή έδαφος υπό κηδεμονία, προτεκτοράτο

Italiano (Italian)
fidarsi di, fiducia, sodalizio

idioms:

• in trust    in custodia
• on trust    a credito
• take on trust    accettare
• trust company    sodalizio
• trust fund    fondo fiduciario
• trust hospital    ospedale privato
• trust territory    protettorato

Português (Portuguese)
n. - fé (f), confiança (f), crédito (m), encargo (m)
v. - acreditar em, confiar em, encarregar

idioms:

• in trust    em confiança
• on trust    sem verificação prévia
• take on trust    aceitar sem verificação prévia
• trust company    companhia fiduciária
• trust fund    fundo monetário
• trust hospital    hospital (m) público sustentado pelo governo (Brit.)
• trust territory    território sobre a guarida das nações unidas

Русский (Russian)
доверять, верить, доверяться, доверие, вера

idioms:

• in trust    быть под опекой
• on trust    полностью довериться
• take on trust    полностью довериться
• trust company    трест
• trust fund    деньги вверенные попечителю
• trust hospital    больница под попечением треста
• trust territory    подопечная территория

Español (Spanish)
n. - confianza, esperanza, trust, fideicomiso, depósito
v. intr. - confiar, tener confianza, esperar, fiar, vender a crédito
v. tr. - confiar en, dar crédito, esperar que

idioms:

• in trust    en fideicomiso, en depósito
• on trust    al fiado, a crédito
• take on trust    aceptar o creer a ojos cerrados
• trust company    compañía fiduciaria, banco de depósito
• trust fund    fondo fiduciario, fondo en depósito
• trust territory    territorio en fideicomiso

Svenska (Swedish)
n. - förtroende, förtröstan, tilltro, tro, tillit, (trygg)förvissning, (gott)hopp, (säker)förväntan, ansvar, omvårdnad, förvalting (jur.), förtroendeuppdrag, tjänst, anförtrodda medel, deposition, fideikomiss (jur.), trust (hand.), sammanslutning, förbund, stiftelse, pålitlig
v. - lita (förlita sig) på, hysa (ha) förtroende för, sätta tro till, tro på, vara förvissad (säker) om, tro (fullt och fast) på, anförtro

中文（简体）(Chinese (Simplified))
信任, 信赖, 管理, 照顾, 托管, 信托, 托拉斯, 企业联合, 赊售, 赊责, 确信, 依赖, 想, 依靠, 赊给

idioms:

• in trust    被托管
• on trust    不加考察, 赊帐
• take on trust    轻易相信, 对...不假思索地相信
• trust company    信托公司
• trust fund    信托基金, 信贷资金
• trust hospital    信托医院
• trust territory    托管领土

中文（繁體）(Chinese (Traditional))
n. - 信任, 信賴, 管理, 照顧, 託管, 信託, 托拉斯, 企業聯合
v. intr. - 信任, 信賴, 賒售, 賒責, 確信, 依賴
v. tr. - 信任, 信賴, 想, 確信, 依靠, 依賴, 賒給

idioms:

• in trust    被託管
• on trust    不加考察, 賒帳
• take on trust    輕易相信, 對...不假思索地相信
• trust company    信託公司
• trust fund    信託基金, 信貸資金
• trust hospital    信託醫院
• trust territory    託管領土

한국어 (Korean)
n. - 신용, 위탁, 확신
v. intr. - 신용하다, 의지하다, 외상으로 팔다
v. tr. - 신뢰하다, 맡기다, 확신하다

idioms:

• in trust    신용으로
• take on trust    책임을 떠맡다

日本語 (Japanese)
n. - 信頼, 信頼できるもの, 委託, 保管, 期待, 信託, 義務, 責任, 企業合同
v. - 信頼する, 当てにする, 任せる, 委託する, 期待する, 信じる, 掛け売りする

idioms:

• in trust    委託して, 委託されて
• on trust    掛けで, 人の言うままに
• take on trust    信頼する
• trust company    信託会社, 信託銀行
• trust fund    信託金, 信託資金
• trust hospital    信託病院
• trust territory    信託統治地域

العربيه (Arabic)
‏(الاسم) أمانه, وديعه, ثقه (فعل) يرجو, يأمل, يثق‏

עברית (Hebrew)
n. - ‮אמון, ביטחון, פיקדון, שמירה, נאמנות, קרן, טראסט (התאגדות חברות מסחריות לשם השתלטות על השוק), אפוטרופסות, מונופול‬
v. intr. - ‮בטח ב-, סמך על, האמין ל-‬
v. tr. - ‮איפשר, הירשה, מכר בהקפה, הפקיד בידי‬

If you are unable to view some languages clearly, click here.

To select your translation preferences click here.