an entity created to hold assets for the benefit of certain persons or entities,
with a trustee managing the trust (and often holding title on behalf of the trust).
Most trusts are founded by the persons (called trustors, settlors and/or donors)
who execute a written declaration of trust which establishes the trust and spells
out the terms and conditions upon which it will be conducted. The declaration also
names the original trustee or trustees, successor trustees or means to choose future
trustees. The assets of the trust are usually given to the trust by the creators,
although assets may be added by others. During the life of the trust, profits and,
sometimes, a portion of the principal (called "corpus") may be distributed to the
beneficiaries, and at some time in the future (such as the death of the last trustor
or settlor) the remaining assets will be distributed to beneficiaries. A trust may
take the place of a will and avoid probate (management of an estate with court supervision)
by providing for distribution of all assets originally owned by the trustors or
settlors upon their death. There are numerous types of trusts, including "revocable
trusts" created to handle the trustors' assets (with the trustor acting as initial
trustee), often called a "living trust" or "inter vivos trust" which only becomes
irrevocable on the death of the first trustor; "irrevocable trust," which cannot
be changed at any time; "charitable remainder unitrust," which provides for eventual
guaranteed distribution of the corpus (assets) to charity, thus gaining a substantial
tax benefit. There are also court-decreed "constructive" and "resulting" trusts
over property held by someone for its owner. A "testamentary trust" can be created
by a will to manage assets given to beneficiaries.
See also constructive trust declaration of trust inter vivos trust living trust
resulting trust settlor testamentary trust trustee trustor
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