Hennepin residents may often hear the world “trust” used in association with estate planning. While most likely have a general idea of what a trust is, they may lack an in-depth understanding of its purposes. This lack of knowledge is no doubt compounded by the many different types of trusts out there. Yet before one attempts to discern the differences between these trust subtypes, it is first important to comprehend that fact that all trusts can be broken down into two general categories: express and non-express.
Duhaime’s Law Dictionary defines a trust as a legal obligation over the management of property given to a trustee by another (called the “settlor” or “donor”) in order to benefit a third party (the beneficiary). The Uniform Trust Code created by the National Conference of Commissioners on Uniform State Laws defines the guidelines for determining the difference between express and non-express trusts. Express trusts are those that meet the common legal definition. In order to create one, the UTC requires four different elements:
- A settlor with property.
- An expressed intention from the settlor to create a trust.
- A defined beneficiary.
- A trustee with responsibilities given through a trust article.
On top of the aforementioned requirements, a trust cannot name the sole trustee as the sole beneficiary. When this happens, questions may arise about the trustee attempting to secure him or herself an inequitable portion of the settlor’s assets. The court may then step in and impose a non-express trust, or one not derived from the explicit instructions of a donor. In the case of these trusts, the trustee is put under a legal obligation to return the property to either the original settlor or the person or parties determined to be the rightful owners.