A trust is a legal arrangement in which property is held or managed by one party for the benefit of another under stated terms. In plain language, it is a structure that separates control of assets from the right to benefit from them.
Why It Matters
The term matters because trusts are used for estate planning, asset management, incapacity planning, and long-term support for children or other beneficiaries. They often shape how property is managed, when distributions happen, and who owes fiduciary obligations.
Where It Appears
The term appears in estate plans, probate-adjacent disputes, family wealth planning, special-needs arrangements, real-estate transfers, and litigation about administration or fiduciary breach.
Practical Example
A parent creates a trust so money can be managed for a child until adulthood, with a trustee authorized to invest funds and make distributions for health and education according to the trust terms.
How It Differs From Nearby Terms
- A will gives directions that generally take effect at death, while a trust can operate during life, after death, or both.
- Fiduciary duty describes the legal obligation of the trustee or another person managing property for others.
- Title may be held in the name of a trustee, but title alone does not explain the trust relationship.
Related Terms
Knowledge Check
- Is a trust just another word for a will? No. A trust is a separate legal arrangement for holding and managing property.
- Why does fiduciary duty matter in a trust? Because the person managing trust property must act according to legal duties owed to the beneficiaries.