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Trust Fund

In law, arrangement whereby property legally owned by one person is administered for the benefit of another. Three parties are ordinarily needed for the relation to arise:

  • the settlor, who bequeaths or deeds the property for another's benefit;
  • the trustee, in whose hands the control of the property is vested and who receives a fee fixed by law;
  • and the beneficiary, for whose use the proceeds of the property are to be applied.

In some cases the settlor may be the trustee or beneficiary, but it is indispensable that the trustee (legal owner) and the beneficiary (equitable owner) be different persons.

The trustee's duty is to make the capital or earnings available to the beneficiary in the manner prescribed by the settlor and to manage the property prudently and honestly.

The beneficiary may bring suit if this duty is breached. In modern times banks and trust companies, with their special facilities for handling investments, are often named the trustees of substantial properties.


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