Characteristics of Trust - Part 1

Bethany Walsh

Sep 18, 2021

(I) The High flexibility of Trust

The flexibility of a trust is reflected in the identity of the parties to the trust. Generally speaking, a trust has three parties: the principal, the trustee and the beneficiary. But sometimes there are only two parties to a trust. For example, if the principal establishes a declarative trust, that is, a trust established by oral or written declaration in which the principal himself is the trustee, the principal and the trustee are one and the trust has only two parties. Another example is that if the principal establishes a self benefit trust, that is, the principal is the beneficiary of the trust at the same time, then the principle and the beneficiary are one and the trust has only two parties. In addition to the above, there are trusts without principals. For example, a constructive trust created by law for the purpose of fairness does not have a trustee who voluntarily establishes the trust.

Understanding: There may be only two parties to a trust, but not less than two. Since a person cannot be liable to himself, the same person cannot be both a principal, a trustee and a beneficiary.

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