Definition

• The law created a legal entity called a trust to allow a person or entity to manage property for the benefit of another. A trust results in a relationship in which a person or entity called a trustee possesses legal title over certain property with a duty to administer, safeguard, invest and manage the trust income and assets on behalf of selected beneficiaries. These beneficiaries hold equitable title to the property. The term "legal title" refers to ownership over property that allows the owner to administer but not benefit from the property while "equitable title" refers to ownership over property that allows the owner to benefit but not administer the property.
  
  

Types

• The law permits the establishment of different types of trusts. It allows the establishment of trusts to support a minor (called support trusts) or charity (charitable trusts). A family trust supports the interests of a particular family. Typically the mother and/or father is named as trustee(s) over the trust while the children are named as beneficiaries. A family trust gives the trustee discretion over whether to distribute the income and/or principal of the trust property to the beneficiaries.
  
  

Beneficiary Rights/Discretion

• The trustee manages the trust property and has discretion over whether to distribute the assets, but the beneficiary does have a limited right to control this discretion. If, and only if, the trustee "abuses his power" can the beneficiary have a court interfere with the trustee's discretion over the trust property. If a trustee acts dishonestly or in bad faith then this would constitute an abuse of power sufficient enough for a court to intervene and stop the trustee. Otherwise the trustee exercises complete discretion over the trust assets.
  
  

Beneficiary Rights/ Care

• A beneficiary possesses the right to expect that the trustee abide by its duty of care over the trust property and also possesses the right to enforce that expectation. Trust law imposes an obligation on trustees to administer the trust as a reasonable person would in administering their own property. If the trustee fails to fulfill this duty then the beneficiary may have a court require that the trustee fulfill his obligations or legally proscribe him from failing to do his duties.
  
  

Beneficiary Rights/Loyalty

• A beneficiary possesses the right to expect that the trustee abide by its duty of loyalty with regard to the trust and the trust beneficiaries. Trust law imposes an obligation on trustees to refrain from engaging in transactions where he represents his personal interest while at the same time representing the interests of the trust. For example, if the trustee buys trust property he is breaching his duty of loyalty to the trust because he is representing his interest, which seeks to buy trust property, and at the same time representing the trust's interests when as administrator of the trust he sells the trust property for a profit.