There are three parties to a trust:
● Settlor: the person that sets up the trust and contributes property to the trust.
● Trustee: the person that manages the property placed in the trust.
● Beneficiary: the person that ultimately receives the property from the trust.
Although a trust involves three parties, it does not require three people. The settlor and the trustee can be the same person. In addition, the settlor and the beneficiary can be the same person. If there is more than one trustee and/or more than one beneficiary, one person can be both a trustee and beneficiary.
However, if there is only one trustee and one beneficiary, the trustee and the beneficiary can NOT be the same person. This is because a trust requires a division of legal ownership (held by the trustee) and equitable ownership (held by the beneficiary). If the sole trustee is also the sole beneficiary, the "merger doctrine" applies (i.e. the legal and equitable ownership interests merge), thereby terminating the trust.
Want to learn more about trusts? Please contact us and speak to one of our professionals.
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