When a trust is settled, what happens to ownership?

When a trust is settled, what happens to ownership?

• A. The legal and equitable ownership of property is divided between the trustees and beneficiaries respectively.
• B. The trustees own all legal and equitable ownership.
• C. The beneficiaries own the property outright.
• D. The settlor retains all rights to the property.

Answer: (B)

In a settled trust, ownership is split between two roles. The trustees hold the legal title to the trust property, meaning they are the formal owners in law and are responsible for managing the assets. The beneficiaries hold the equitable (beneficial) interest, meaning they are entitled to enjoy the benefits of the assets under the terms of the trust, even though they don’t have the legal title themselves. This separation—legal ownership with the trustees, beneficial ownership with the beneficiaries—is what allows the trust to be managed for the benefit of the beneficiaries while keeping the assets under fiduciary administration. The settlor’s control ends once the assets are placed in the trust, and the beneficiaries don’t own the assets outright or personally control them.

In a settled trust, ownership is split between two roles. The trustees hold the legal title to the trust property, meaning they are the formal owners in law and are responsible for managing the assets. The beneficiaries hold the equitable (beneficial) interest, meaning they are entitled to enjoy the benefits of the assets under the terms of the trust, even though they don’t have the legal title themselves. This separation—legal ownership with the trustees, beneficial ownership with the beneficiaries—is what allows the trust to be managed for the benefit of the beneficiaries while keeping the assets under fiduciary administration. The settlor’s control ends once the assets are placed in the trust, and the beneficiaries don’t own the assets outright or personally control them.