Active Trust

Posted in Finance, Accounting and Economics Terms, Total Reads: 865

Definition: Active Trust

In simple words, an active trust is a trust fund where the trustee has certain active duties. An alternate definition can be an active trust being a trust in which the trustee is liable for the performance of substantial duties in respect to the control, management, and disposition of the trust property.

In this context:

Trust implies a formal arrangement of legal control over someone's money or property. A Trust can be property held by one party(trustee) for the benefit of another (donor/beneficiary).

And the trustee implies the person who has this control who has other particular duties, such as investing money, or passing on profits, rents, etc. (in case of an active trust).

Active trust is a trust in which the trustee has charge of management or administration besides the mandatory obligation to transfer the property to the beneficiary. An active trust maintains the legal estate in the trustee, in order to enable him to perform the duties/obligations entrusted to him by the donor.

In an active trust duties are to be performed by the trustee with reference to the administration of the trust property, and in which the significant use of the property is to be impliedly or explicitly, by reason of such active duty, vested in the trustee. These duties can be dealing with handling of assets, collections and sales.

Hence, this concludes the definition of Active Trust along with its overview.

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