Creation and functioning of trusts
A trust is basically an arrangement made with regard to future devolvement and/or use of a property by its owner. This property can be immovable such as land, houses, building structures etc., or movable such as money,
shares, debentures, ornaments etc.
A trust can be distinguished from a gift or transfer of property by way of sale, mortgage, lease etc.
When a property is gifted or is transferred by way of sale, mortgage, lease etc., it involves only two parties the owner of the property and the person or persons getting the property via such transfer called the transferee.
However, when a property is arranged to be transferred by way of a trust apart from the owner and the transferee a third party called a trustee is also involved.
The property in such cases is not transferred directly to the transferee but is put in control of the trustee for the benefit of the transferee. The trustee depending upon the nature of the trust either transfers the property or its earnings to the transferee at the happening of certain events or applies the property and /or its gains for the benefit of such a transferee.
The document by which a trust is created is termed as an instrument of the trust and the person for rules benefit the trust is created is termed as beneficiary.