An individual, small business or business can create a trust for any legal purpose. For example, a trust can create an education fund for children or grandchildren, but it cannot be created to evade corporate taxes. A written trust agreement must set out the terms of the trust and set out the rights and obligations of all parties named in the deed. “Fiduciary.” Abbreviations.com. STANDS4 LLC, 2022. Web. January 13, 2022. . A settlor who establishes a relationship of personal trust should consider the advantages and disadvantages of creating a relationship of trust with the TDU. In the case of a UDT trust, the settlor, as trustee, has the right to change the terms of the trust and change its beneficiaries.
The trust`s assets will also bypass probate procedures if the settlor dies. This type of agreement, known as a revocable trust, has several drawbacks. It does not provide protection to the trust, so it is subject to court judgments and other claims against the settlor. A revocable trust also does not protect the assets of the trust from estate taxes. By appointing an independent trustee, the settlor can ensure that the assets of the trust are not subject to inheritance tax. By creating an irrevocable trust, the settlor may also be able to legally reduce or avoid certain income and capital gains taxes, depending on how the trust is structured. The party that creates a relationship of trust is called the settlor. In the trust agreement, the settlor designates a person, the trustee, to take possession of and manage the assets of the trust.
A trustee can be an individual, a small business or a corporation. The party to receive income or other assets from the trust is called the beneficiary. As a small business owner, you may come across an escrow agreement or instrument that includes the term “UDT” or more commonly “U/D/T”. A trust is a legal arrangement in which one person controls assets for the benefit of or for another person, and some trust agreements use the abbreviation UDT. This abbreviation has a specific legal meaning and indicates that the agreement creates a certain type of personal trust. UDT is an abbreviation of “under trust” used in some trust instruments to indicate that the settlor creates the trust and controls its assets. When a trust is created under a trust agreement, the settlor and trustee are the same party. Most personal trusts are conventioned trusts or “UAs” in which the settlor and trustee are different parties. The UDT never appears in testamentary trusts created by will. The settlor cannot act as trustee of a testamentary trust because the trust comes into effect upon the settlor`s death.
Grygor Scott has been writing professionally since 1991, focusing on law, government, food and travel. His work has appeared in the New York Resident and on several websites. The author of more than 20 nonfiction books, Scott graduated with honors from the University of North Carolina School of Law. TRUNC – TRUP – TRUS – TRUSS – TRUST – TRUT – TRUTH – TRUX – TRV – TRVA.