When the property of someone is held for the benefit of someone else by a third party, it is called a trust. This is done through formal agreements and the ownership is given to the third party who are called trustees. This is done normally to protect one or more of the beneficiaries or the parties that benefit from the property.
The trust agreement which is drawn up will normally consist of the reason why the trust has been established, when it will be terminated and how one will be aware that the trust has fulfilled the purpose for which it has been established. The trust agreement also will mention the details of all the property or assets which it is to safeguard. The terms and conditions specify the powers of the trustees and their limitations as well as other provisions that need to be taken care of including the reporting. Incase the trustees need to be compensated for their services, that too is mentioned in the trust agreement.
The trust agreement is also called by other various names such as the trust deed or trust document or even the trust instrument.
Trusts have been in existence since ancient roman times. Though now the main reasons for starting of a trust is incase the beneficiary is a minor or mentally challenged. It may even be done to save tax or if the person who owns the property or assets is absent or even dead. Trusts are normally created in the wills which are made.
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