What is a Trust? What isn't a Trust?
"The subject matter of trusts...is evenly divided between creation and administration. The creation portion of trusts can be summarized by a definitional point of view; i.e., the elements of a trust (res, trustee, trustor, beneficiary and trust intent) cover the subject. Like offer, acceptance and consideration elements of contracts, the elements of a trust serve as the overview of the creation of the trust. The administration part of a trust, on the other hand, consists of a series of duties which can each be approached with the same technique used in discussing negligence issues in the subject of torts: Duty, Breach, Causation, Damages and Defenses.
...The courts [have] left room to allow the subject [of trusts] to grow. Efforts to codify and make certain have resulted in a Restatement (Restatement, Second and Third, Trusts) rather than a Uniform Code. While Wills was predominately based on statutes, Trusts is based more upon case law. Trusts is the child of the Courts of Equity and shows the markings of that ancestry: a greater emphasis upon broad principles than upon specific rules, greater uncertainty at the border areas, and case-by-case determination of matters rather than a clear cut dividing line drawn in advance to resolve all matters.
While Wills [like Christ's or the Father's Will] focus upon what part of the estate is distributed to whom, Trusts focus upon the dutied of the person making the distribution and how distribution is achieved.
A trust is an intentionally created fiduciary relationship with regard to property in which the legal title is in the trustee, but the benefits of ownership is in another person, the beneficiary. The Trust relationship imposes fiduciary duties upon the trustee for the benefit of the beneficiary. These fiduciary duties are the life blood of the relationship.
The center of the trust concept is easy to define and recognize; its margins are quite obscure. Among the problem areas are the following:
There are other relationships which are similar in one way or more ways to a Trust - agencies, bailments, partnerships, personal representatives status (executor, administrator, guardian, conservator, committee), third party beneficiary contracts, assignments, mortgages, equitable charges and liens. Distinguishing these relationships from a Trust helps one to see the general areas of the trust field, but does not clearly define what a Trust is.
Trust is a broad category, like the term "clothing". A particular trust may be designated for a particular purpose, but may be inappropriate for other uses, just like a pair of shoes protects the feet, but will not satisfy the dictates of modesty, and a pair of coveralls will protect from arrest for indecent exposure, but will not keep the hands and feet warm. Both coveralls and the shoes are "clothing". Similarily, a "charitable trust" and a "private trust" are both trusts, although opposites. The word Trust may be modified by words indicating any of a greater number of dimensions; e.g., a spend-thrift trust is one which contains provisions limiting the assignability of the beneficial interest. It could also be a living or a testamentary trust. It could be revocable or irrevocable.
A trust arises when the owner of property separates the benefits from the burdens of ownership by giving them to different people. Normally the benefits and burdens of property ownership are in the same person; for example the owner of an apartment house would be entitled to collect rents (a benefit) and would be required to make repairs and pay taxes (burdens). The owner would then receive a net benefit of have a net loss. If the owner wanted to separate the benefits and burdens, he could create a trust by delivering legal title to one person (the trustee) and the equitable (or beneficial) title to another (the beneficiary). The trustee would then have duties imposed upon her by the terms of the trust instrument and be general trust law. The beneficiary would have only the benefits (perhaps reduced slightly by the trustee's fees). The trust would have the power (unless denied by the trust instrument) and perhaps even the duty (perhaps even if prohibited by the trust instrument) to sell the apartment house and reinvest the proceeds for the benefit of the beneficiary.
It is the separation of the legal title and the equitable title (i.e., the "ownership" which would have been protected by the respective courts of law and equity) which provides the poles between which the fiduciary duty the electricity of a trust relationship flows. The Trust is a relationship which requires the existence of some property interest, the "res"."