Trusts Law

Definition of Trust

The word trust by definition means that something gets put into the charge or care of another. A trust is usually formed with a view to a future disbursement of assets. The person who is entrusted with the duty of care is known as a trustee.

Trusts Law in the United States

As in most legal areas, trusts law is also governed by specific guidelines in the U.S. Here are a few basic features of trusts law in the United States:

  • There is a uniform law which applies to trusts in the U.S. which is known as the Uniform Trust Code, (UTC). Even though this code is followed, different states interpret the UTC differently.

  • There are three basic members defined in a trust, the grantor or settlor, the person who creates the trust, the trustee, who is the person entrusted with the settlor’s assets and the beneficiary who is the ultimate benefactor for the settlor’s assets.

  • There are different categories of trusts and depending on the type of trust which has been created and different trusts law applies to each type.

  • There can be one trustee or several. Where Co-trustees exist, there are specific guidelines which apply to all of the trustees. Where there are several trustees, administration is carried out by voting.

  • In the case of multiple trustees, if a trustee cannot perform the regular duties due to sickness or some other encumbrance, the UTC permits the other co-trustees to perform duties of the incapacitated trustees.

  • Trustees may be individuals or corporations like trust companies or banks. Some trustees may be appointed on the basis of certain core competencies. In such a case, the competency of the trustee should be examined and scrutinized from time to time to establish the expertise of the person in that particular specialty.

  • The UTC also states that “good faith” should be practiced by trustees. According to U.S trustee’s law, trustees should not act illegally or in any way that should contravene public policy. Trustees should exercise what is known as “duty of prudent administration” which amounts to acting in the best interests of the settlor at all times.

  • “Duty of Loyalty” should be followed by trustees. This law revolves around the principle of acting exclusively in favor of the beneficiaries.

  • Ultimately, trustees must maintain up-to-date records and keep beneficiaries informed, within reason about the trust.


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