What is the difference between private and public trust?

The main difference between private and public trusts is that private trusts have specific and specific beneficiaries, while public trusts usually do not have specific individual beneficiaries.

A trust is a fiduciary relationship in which one party (settlor) grants another party (trustee) the right to hold property or assets for the benefit of a third party (beneficiary). The establishment of a trust serves the legal protection of the trustor's assets and ensures that the asset allocation takes place according to the trustor's wishes. Additionally, it can save time, reduce paperwork, and even avoid inheritance or inheritance taxes. Terms such as escrow, trustor, and trustee typically appear in legal and financial cases such as insurance policies, bank accounts, and wills.

Key areas covered

1. What is private trust - definition, characteristics 2. What is public trust - definition, characteristics 3. Difference between private and public trust - comparison of the most important differences

key terms

Private Trust, Public Trust, Beneficiary, Trustor, Trustee Difference Between Private and Public Trust - Comparative Summary

What is a private trust

A private trust is a trust that is set up for the benefit of one or more individuals and is enforceable by the beneficiaries. This type of trust is usually set up for family members, relatives, friends, etc. Indeed, one of the main characteristics of private trusts is that they must have certain and specific beneficiaries. In addition, the establishment of a private trust gives a business legal form and ensures that assets or property are used only for the benefit of the beneficiaries and in the manner desired by the trustee.

Private vs. public trust

In addition, there are three types of private trust: revocable trust, irrevocable non-discretionary trust and irrevocable discretionary trust. In the case of a revocable trust, the settlor can easily change or terminate after its establishment. In the case of an irrevocable, non-discretionary trust, it is not possible to withdraw the assets, but the settlor has complete control over the trust; he can decide which beneficiary receives which assets and how much. In the case of an irrevocable discretionary trust, on the other hand, the trustee decides which beneficiary receives which assets and in what amount. In addition, the settlor alone decides on the list of beneficiaries.

What is a public trust

A public trust is an express trust for a public, religious, or charitable purpose. A public trust has a specific benevolent purpose. It usually envisages the benefits and needs of the beneficiaries. Although the beneficiaries in the trust are specific and unique, it can include a wide range of individuals falling within the parameters of the subject and purpose of the trust.

Compare private and public trust

In addition, there are many rules, controls, controls and balances for the functioning and maintenance of public trusts. This is because public trusts are set up for the benefit of a majority of the people and it is imperative to ensure that the purpose for which the trust was set up is not compromised or destroyed. Therefore, trustees should always maintain effectiveness and transparency.

Difference Between Private and Public Trust

definition

A private trust is a trust established for the benefit of one or more individuals and is enforceable by the beneficiaries, while a public trust is an express trust established for a public, religious, or charitable purpose.

Beneficiaries

In addition, private trusts have certain and specific individual beneficiaries, while public trusts usually do not have specific individual beneficiaries.

Trustee

A public trust usually has a trustee, while a private trust has either an executive trustee or a few appointed trustees.

diploma

A private trust is a trust in favor of one or more individuals and can be enforced by the beneficiaries, while a public trust is an express trust for a public, religious, or charitable purpose. The main difference between private and public trusts is that private trusts have specific and specific beneficiaries, while public trusts usually do not have specific individual beneficiaries.

Reference:

1. " Private trust ." 2. “ Succession Planning: Understanding Public Trusts and Their Management .” Money Control.

Image courtesy:

1. " Chart of a Trust " By Anja Bauer - excerpt from [1] (CC BY-SA 3.0) via Commons Wikimedia2. " Contract, number of images : 66 " (CC0) via HippoPx

About the author: Hasa

Hasa holds a BA in English, French and Translation Studies. She is currently reading for a Masters in English. Her areas of interest include literature, language, linguistics and also food.