TRUST

Why is a trust such a useful device for the distribution of property interests?

Why is a trust such a useful device for the distribution of property interests?

Introduction

A relationship created at the direction of an individual, in which one or more persons contain 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 throughout their lives or after their deaths through the use of a trust. There are numerous kinds of trusts and numerous 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 perplexing, but usually it is worried with whether a believe has been conceived, whether it is a public or personal believe, if it is lawful, and if the trustee has lawfully organised the believe and believe house (Abts, 2002).

Discussion

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 demonstration, 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 21 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 (Kruse, 2002).

A fiduciary relationship exists in the law of trusts when the settlor relies on the trustee and places special confidence in her. The trustee should proceed in Good Faith with strict honesty and due regard to protect and assist the concerns of the beneficiaries. The trustee furthermore has a fiduciary relationship with the beneficiaries of the trust. 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 (Abts, 2002).

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 furthermore consider a number of factors—such as the intention of the settlor, the state where the settlor inhabits, 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 (Rothschild, 1999).

As a general rule, personal property can be held in ...