Insurance Topic
Trust
A trust is a fiduciary arrangement in which a trustee holds and manages property or rights for the benefit of one or more beneficiaries pursuant to defined terms.
Definition
A trust is a legal construct that separates ownership interests by vesting legal title in a trustee while preserving equitable interests for beneficiaries, governed by a trust instrument that specifies duties, powers, and distribution rules.
Structural Components
- Grantor (Settlor): The party who establishes the trust and contributes assets.
- Trustee: The fiduciary responsible for administering the trust in accordance with its terms.
- Beneficiaries: Persons or entities entitled to benefits under the trust.
- Trust Property (Corpus): Assets transferred into the trust.
- Trust Instrument: The governing document defining terms, powers, and limitations.
Parameters & Conditions
- Creation requires intent, identifiable property, a trustee, and beneficiaries.
- Trusts may be revocable or irrevocable based on retained grantor powers.
- Administration is subject to fiduciary duties, including loyalty and prudence.
- Distributions occur per the trust instrument and applicable law.
Topic Relationships
Exceptions, Limitations & Boundaries
Trust terms are constrained by statutory law and public policy, and certain assets or rights may require specific formalities to be validly transferred into a trust.
Trust: Definitional FAQ
Is a trust a legal person?
No. A trust is a legal relationship; legal actions are undertaken by the trustee in a fiduciary capacity.
Can a trust own insurance proceeds?
Yes. A trust may be designated as a beneficiary to receive insurance proceeds according to its terms.
Does a trust eliminate fiduciary duties?
No. Trustees are bound by fiduciary duties defined by law and the trust instrument.