Editing Trust (law) (section)

==Purposes==
Common purposes for trusts include:
* Employee ownership: Shares in a company may be held by the trustee of an [[employee trust]], often indefinitely, as part of an [[Employee stock ownership|employee share or share option plan]] of that company.<ref>{{Cite book|url=https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/221550/autumn_statement_2012_complete.pdf|title=Autumn Statement 2012|publisher=HM Treasury|year=2012|isbn=978-0-10-184802-2|pages=43|access-date=18 October 2019|archive-date=24 July 2019|archive-url=https://web.archive.org/web/20190724191624/https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/221550/autumn_statement_2012_complete.pdf|url-status=live}}</ref>
*Privacy: Trusts may be created purely for privacy. The terms of a will are public in certain jurisdictions, while the terms of a trust are not.
* [[Spendthrift trust|Spendthrift clauses]]: Trusts may be used to protect beneficiaries (for example, one's children) against their own inability to handle money. Courts may generally recognize spendthrift clauses against trust beneficiaries and their creditors, but not against creditors of a settlor.<ref>{{Cite web |title=spendthrift clause |url=https://www.law.cornell.edu/wex/spendthrift_clause |access-date=2024-02-09 |website=LII / Legal Information Institute |language=en}}</ref>
* Wills and estate planning: Trusts frequently appear in [[Will (law)|wills]] (indeed, technically, the administration of every deceased's estate is a form of trust). Conventional wills typically leave assets to the deceased's spouse (if any), and then to the children equally. If the children are under 18, or under some other age mentioned in the will (21 and 25 are common), a trust must come into existence until the 'contingency age' is reached. The executor of the will is (usually) the trustee and the children are the beneficiaries. The trustee will have authority to assist the beneficiaries during their minority.<ref>{{cite web | title = Frequently Asked Questions | url = http://scottrosenberglaw.com/faq.html#Trusts | first = Scott D. | last = Rosenberg | date = 2009–2010 | access-date = 28 November 2011 | archive-date = 11 November 2011 | archive-url = https://web.archive.org/web/20111111040628/http://www.scottrosenberglaw.com/faq.html#Trusts | url-status = live }}</ref>
* Charities: In some common law jurisdictions all charities must take the form of trusts. In others, [[corporation]]s may be charities also. In most jurisdictions, charities are tightly regulated for the public benefit (in England, for example, by the [[Charity Commission]]).
* [[Unit trust]]s: The trust has proved to be such a flexible concept that it has proved capable of working as an investment vehicle.
* [[Pension]] plans: typically set up as a trust, with the employer as settlor, and the employees and their dependents as beneficiaries.
* Remuneration trusts: for the benefit of directors and employees or companies or their families or dependents. This form of trust was developed by Paul Baxendale-Walker and has since gained widespread use.<ref>[[Paul BW Chaplin#Biography]]</ref>
* Corporate structures: Complex business arrangements, most often in the finance and insurance sectors, sometimes use trusts among various other entities (e.g., corporations) in their structure.
* [[Asset protection]]: Trusts may allow beneficiaries to protect assets from creditors as the trust may be [[bankruptcy remote]]. For example, a discretionary trust, of which the settlor may be the protector and a beneficiary, but not the trustee and not the sole beneficiary. In such an arrangement, the settlor may be in a position to benefit from the trust assets without owning them, and therefore, in theory, protected from creditors. In addition, the trust may attempt to preserve anonymity with a completely unconnected name (e.g., "The Teddy Bear Trust"). These strategies are ethically and legally controversial.
* Tax planning: The tax consequences of doing anything using a trust are usually different from the tax consequences of achieving the same effect by another route (if, indeed, it would be possible to do so). In many cases, the tax consequences of using the trust are better than the alternative, and trusts are therefore frequently used for legal [[Tax avoidance/evasion|tax avoidance]]. For an example see the "nil-band discretionary trust", explained at [[Inheritance Tax (United Kingdom)]].
* [[Concurrent estate|Co-ownership]]: Ownership of property by more than one person is facilitated by a trust. In particular, ownership of a matrimonial home is commonly effected by a trust with both partners as beneficiaries and one or both owning the legal title as trustee.
* [[Construction law]]: In Canada<ref>{{Cite web |title = Construction law: Breach of trust in the construction industry |url = http://www.iflr.com/Article/1984910/Channel/193438/Construction-law-Breach-of-trust-in-the-construction-industry.html |first1 = Harvey J |last1 = Kirsh |first2 = Lori A |last2 = Roth |publisher = International Finance Law Review |date = August 31, 1997 |url-access=subscription |access-date = 16 September 2011 |archive-date = 26 February 2019 |archive-url = https://web.archive.org/web/20190226043215/http://www.iflr.com/Article/1984910/Channel/193438/Construction-law-Breach-of-trust-in-the-construction-industry.html |url-status = live }}</ref> and Minnesota monies owed by employers to contractors or by contractors to subcontractors on construction projects must by law be held in trust. In the event of contractor insolvency, this makes it much more likely that subcontractors will be paid for work completed.
* [[Legal retainer]] – Lawyers in certain countries often require that a legal retainer be paid upfront and held in trust until such time as the legal work is performed and billed to the client, this serves as a minimum guarantee of remuneration should the client become insolvent.<ref>{{Cite web|url=https://www.lawyersmutualnc.com/risk-management-resources/articles/clients-guide-to-understanding-a-lawyers-trust-account|title=Client's Guide to Understanding a Lawyer's Trust Account |website=Lawyers Mutual Insurance Company |first1=Tom |last1=Boyle |date=April 29, 2015 |access-date=2019-07-01|archive-date=1 July 2019|archive-url=https://web.archive.org/web/20190701173720/https://www.lawyersmutualnc.com/risk-management-resources/articles/clients-guide-to-understanding-a-lawyers-trust-account|url-status=live}}</ref> However, strict legal ethical codes apply to the use of legal retainer trusts.<ref>{{Cite web|url=https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_5_fees/ |date=April 14, 2020 |title=Rule 1.5: Fees|website=American Bar Association |language=en|access-date=2019-07-01|archive-date=1 July 2019|archive-url=https://web.archive.org/web/20190701173722/https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_5_fees/|url-status=live}}</ref>