Old Frisian trast , Dutch troost "comfort, consolation," Old High German trost "trust, fidelity," German Trost "comfort, consolation," Gothic trausti "agreement, alliance". Related to Old English treowian "to believe, trust," and treowe "faithful, trusty" see true. Meaning "businesses organized to reduce competition" is recorded from Trust-buster is recorded from Related: Trusted ; trusting. 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. Trust us on this one. RELATED WORDS faith , confidence , expectation , hope , account , protection , care , corporation , group , institution , business , commit , entrust , positiveness , certitude , credence , conviction , certainty , dependence , reliance. Nearby words truss bridge , truss hoop , truss rod , trussed , trussing , trust , trust account , trust busting , trust company , trust deed , trust fund.
Idioms in trust , in the position of being left in the care or guardianship of another: She left money to her uncle to keep in trust for her children. Middle English trusten Old Norse treysta, derivative of traust. Can be confused board committee council panel trust. Synonym study 1. Trust, assurance, confidence imply a feeling of security. Trust implies instinctive unquestioning belief in and reliance upon something: to have trust in one's parents.
Confidence implies conscious trust because of good reasons, definite evidence, or past experience: to have confidence in the outcome of events. The trustee may be compensated and have expenses reimbursed, but otherwise must turn over all profits from the trust properties. There are strong restrictions regarding a trustee with conflict of interest.
Courts can reverse a trustee's actions, order profits returned, and impose other sanctions if they finds a trustee has failed in any of their duties.
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Such a failure is termed a breach of trust and can leave a neglectful or dishonest trustee with severe liabilities for their failures. It is highly advisable for both settlors and trustees to seek qualified legal counsel prior to entering into a trust agreement. A possible early concept which later developed into what today is understood as a trust related to land. An ancient king settlor grants property back to its previous owner beneficiary during his absence, supported by witness testimony trustee. In essence and in this case, the king, in place of the later state trustor and holder of assets at highest position issues ownership along with past proceeds to the original beneficiary:.
On the testimony of Gehazi the servant of Elisha that the woman was the owner of these lands, the king returns all her property to her. From the fact that the king orders his eunuch to return to the woman all her property and the produce of her land from the time that she left Roman law had a well-developed concept of the trust fideicommissum in terms of "testamentary trusts" created by wills but never developed the concept of the inter vivos living trusts which apply while the creator lives. This was created by later common law jurisdictions.
Personal trust law developed in England at the time of the Crusades , during the 12th and 13th centuries. In medieval English trust law, the settlor was known as the feoffor to uses while the trustee was known as the feoffee to uses and the beneficiary was known as the cestui que use, or cestui que trust. At the time, land ownership in England was based on the feudal system. When a landowner left England to fight in the Crusades, he conveyed ownership of his lands in his absence to manage the estate and pay and receive feudal dues, on the understanding that the ownership would be conveyed back on his return.
However, Crusaders often encountered refusal to hand over the property upon their return. Unfortunately for the Crusader, English common law did not recognize his claim.
As far as the King's courts were concerned, the land belonged to the trustee, who was under no obligation to return it. The Crusader had no legal claim. The disgruntled Crusader would then petition the king, who would refer the matter to his Lord Chancellor. The Lord Chancellor could decide a case according to his conscience.
At this time, the principle of equity was born. The Lord Chancellor would consider it "unconscionable" that the legal owner could go back on his word and deny the claims of the Crusader the "true" owner. Therefore, he would find in favour of the returning Crusader. Over time, it became known that the Lord Chancellor's court the Court of Chancery would continually recognize the claim of a returning Crusader. The legal owner would hold the land for the benefit of the original owner and would be compelled to convey it back to him when requested.
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The Crusader was the "beneficiary" and the acquaintance the "trustee". The term "use of land" was coined, and in time developed into what we now know as a trust. The trust is widely considered to be the most innovative contribution of the English legal system.
Trusts are widely used internationally, especially in countries within the English law sphere of influence, and whilst most civil law jurisdictions do not generally contain the concept of a trust within their legal systems, they do recognise the concept under the Hague Convention on the Law Applicable to Trusts and on their Recognition partly only the extent that they are parties thereto. The Hague Convention also regulates conflict of trusts. Although trusts are often associated with intrafamily wealth transfers, they have become very important in American capital markets, particularly through pension funds in certain countries essentially always trusts and mutual funds often trusts.
Property of any sort may be held in a trust. The uses of trusts are many and varied, for both personal and commercial reasons, and trusts may provide benefits in estate planning , asset protection , and taxes. Living trusts may be created during a person's life through the drafting of a trust instrument or after death in a will. In a relevant sense, a trust can be viewed as a generic form of a corporation where the settlors investors are also the beneficiaries. This is particularly evident in the Delaware business trust, which could theoretically, with the language in the " governing instrument ", be organized as a cooperative corporation or a limited liability corporation,  : —6 although traditionally the Massachusetts business trust has been commonly used in the US.
One of the most significant aspects of trusts is the ability to partition and shield assets from the trustee, multiple beneficiaries, and their respective creditors particularly the trustee's creditors , making it " bankruptcy remote ", and leading to its use in pensions, mutual funds, and asset securitization  as well protection of individual spendthrifts through the spendthrift trust.
Trusts may be created by the expressed intentions of the settlor express trusts  or they may be created by operation of law known as implied trusts. An implied trust is one created by a court of equity because of acts or situations of the parties. Implied trusts are divided into two categories: resulting and constructive. A resulting trust is implied by the law to work out the presumed intentions of the parties, but it does not take into consideration their expressed intent.
A constructive trust  is a trust implied by law to work out justice between the parties, regardless of their intentions. In some jurisdictions certain types of assets may not be the subject of a trust without a written document. Generally, a private express trust requires three elements to be certain, which together are known as the "three certainties".
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These elements were determined in Knight v Knight to be intention, subject matter and objects. The certainties of subject matter and objects allow the court to administer trust when the trustees fail to do so. These words are construed objectively in their "reasonable meaning",  within the context of the entire instrument. A trust may have multiple trustees, and these trustees are the legal owners of the trust's property, but have a fiduciary duty to beneficiaries and various duties, such as a duty of care and a duty to inform.
The trustee may be either a person or a legal entity such as a company , but typically the trust itself is not an entity and any lawsuit must be against the trustees.
A trustee has many rights and responsibilities which vary based on the jurisdiction and trust instrument. If a trust lacks a trustee, a court may appoint a trustee. The trustees administer the affairs attendant to the trust. The trust's affairs may include prudently investing the assets of the trust, accounting for and reporting periodically to the beneficiaries, filing required tax returns and other duties. In some cases dependent upon the trust instrument, the trustees must make discretionary decisions as to whether beneficiaries should receive trust assets for their benefit.
A trustee may be held personally liable for problems, although fiduciary liability insurance similar to directors and officers liability insurance can be purchased. For example, a trustee could be liable if assets are not properly invested. In addition, a trustee may be liable to its beneficiaries even where the trust has made a profit but consent has not been given. In the United States, the Uniform Trust Code provides for reasonable compensation and reimbursement for trustees subject to review by courts,  although trustees may be unpaid.
The beneficiaries are beneficial or 'equitable' owners of the trust property.
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Either immediately or eventually, the beneficiaries will receive income from the trust property, or they will receive the property itself. The extent of a beneficiary's interest depends on the wording of the trust document. One beneficiary may be entitled to income for example, interest from a bank account , whereas another may be entitled to the entirety of the trust property when he attains the age of twenty-five years. The settlor has much discretion when creating the trust, subject to some limitations imposed by law.
The use of trusts as a means to inherit substantial wealth may be associated with some negative connotations; some beneficiaries who are able to live comfortably from trust proceeds without having to work a job may be jokingly referred to as "trust fund babies" regardless of age or "trustafarians". Trusts go by many different names, depending on the characteristics or the purpose of the trust.
Because trusts often have multiple characteristics or purposes, a single trust might accurately be described in several ways. For example, a living trust is often an express trust, which is also a revocable trust, and might include an incentive trust, and so forth.
Trusts originated in England, and therefore English trusts law has had a significant influence, particularly among common law legal systems such as the United States and the countries of the Commonwealth. Trust law in civil law jurisdictions , generally including Continental Europe only exists in a limited number of jurisdictions e. The trust may however be recognized as an instrument of foreign law in conflict of laws cases, for example within the Brussels regime Europe and the parties to the Hague Trust Convention.
Tax avoidance concerns have historically been one of the reasons that European countries with a civil law system have been reluctant to adopt trusts. State law applies to trusts, and the Uniform Trust Code has been enacted by the legislatures in many states. In addition, federal law considerations such as federal taxes administered by the Internal Revenue Service may affect the structure and creation of trusts.
In the United States the tax law allows trusts to be taxed as corporations, partnerships, or not at all depending on the circumstances, although trusts may be used for tax avoidance in certain situations. The Dodd-Frank Wall Street Reform and Consumer Protection Act changed this somewhat by not allowing these assets to be a part of large banks' regulatory capital. Living trusts, as opposed to testamentary will trusts, may help a trustor avoid probate.
Both living trusts and wills can also be used to plan for unforeseen circumstances such as incapacity or disability, by giving discretionary powers to the trustee or executor of the will. Negative aspects of using a living trust as opposed to a will and probate include upfront legal expenses, the expense of trust administration, and a lack of certain safeguards. Unlike trusts, wills must be signed by two to three witnesses, the number depending on the law of the jurisdiction in which the will is executed.
Legal protections that apply to probate but do not automatically apply to trusts include provisions that protect the decedent's assets from mismanagement or embezzlement, such as requirements of bonding , insurance , and itemized accountings of probate assets. Living trusts generally do not shelter assets from the U. Married couples may, however, effectively double the estate tax exemption amount by setting up the trust with a formula clause. For a living trust, the grantor may retain some level of control to the trust, such by appointment as protector under the trust instrument.
Living trusts also, in practical terms, tend to be driven to large extent by tax considerations. In many ways trusts in South Africa operate similarly to other common law countries, although the law of South Africa is actually a hybrid of the British common law system and Roman-Dutch law.