How Trust is Created

Trust created in the will of famous people Jacquelyn Kennedy Onassis and former President Richard Nixon are great examples of how to word a trust document.

President Richard Nixon in his trust enumerated the names of the trustees as well as beneficiaries. He even outlined their responsibilities are trustees.

Jacquelyn Kennedy Onassis did the same thing. Her focus though was more on the beneficiaries of the trust – Caroline Kennedy and John F. Kennedy Jr. Jacquelyn Onassis did not also give the specific responsibilities as done by Nixon.

Both trusts though were done inter vivos, that is they were established by the time the trustor were alive. The documents both contained the essential elements involved in a trust document – truster, trustee, beneficiary and trust property.

Detailed discussions on how a trust is created are outlined in the succeeding paragraphs.

Trust Definition

Trust, as defined by the common law legal systems, and as can be seen from the aforementioned examples, pertains to a relationship in which a person or entity called the trustee possesses legal title to certain property or which we refer to as the trust property or trust corpus, but is obliged by a fiduciary duty to exercise that legal control for the benefit of one or more individuals or organizations which is the beneficiary, who hold “beneficial” or “equitable” title. The trust is governed by the terms stipulated in the written trust agreement and local law. The entity (individual, a partnership, or a corporation) that creates the trust is called as trustor, settlor, grantor, donor, or creator. It is important to getacquainted or to keep in mind the basic trust terminologies to avoid confusion when dealing with it – trustor, trustee, beneficiary and trust property.

Trust is a dual title because of its legal and equitable characteristics. Due to this, trust is often referred to as a “split title”. The “title split” of trust law is due to its separate functions. Legal title is one aspect of the trust that pertains to the control, management, and possession characteristics, while equitable (beneficial) title is a feature of trust that involves “benefit,” “enjoyment,” and “use”.