A legal obligation given by a person called the donor or settlor, binding upon the trustee, for the benefit of another person (the beneficiary, cestui que trust or donee).
An independent legal process that a person, usually called a settlor or a donor, can initiate and once started, runs its course to the benefit of a beneficiary and as administered by a person of the settlor's choice, called a trustee, the latter, once apppointed, accountable to the beneficiary.
R. Oerton's Underhill's Law Relating to Trusts & Trustees (London: Butterworths, 1970), page 3 defines a trust as:
".. an equitable obligation binding a person (who is called a trustee) to deal with property over which he has control (which is called the trust property), for the benefit of persons (who are called beneficiary or cestui que trust), of whom he may himself be one, and any one of whom may enforce the obligation. Any act or neglect on the part of a trustee which is not authorised or excused by the terms of the trust instrument, or by law, is called a breach of trust."
The American authority, Scott on Trusts (formal citation: Scott, A. and Fratcher, W., The Law of Trusts, Boston: Little, Brown and Company, 1987, p. 41) very meakly proposes this definition (of an express trust), which leads one to imagine the lengthy committe meeting from which it issued:
"... a fiduciary relationship with respect to property, subjecting the person by whom the title to property is held to equitable duties to deal with the property for the benefit of another person, which arises as a result of a manifestation of an intention to create it."
The trustee manages and administers the property, actual ownership is shared between the trustee and the beneficiary and all the profits go to the beneficiary.
The word fiduciary can be used to describe the responsibilities of the trustee towards the beneficiary.
When a person dies, their assets are held in trust until they can be distributed. Thus, a will forms a trust (called a testamentary trust) but trusts can be formed during the lifetime of the settlor in which case it is called an inter vivos or living trust.
Trusts are further subdivided into express trusts, statutory trusts, and resulting or constructive trusts end even quistclose trusts.
Further Reading: