A trust is a legal entity, established by a trust instrument, that holds assets on behalf of a beneficiary. A trustee is named in the trust document, and it is their responsibility to administer the assets according to the terms of the trust for the benefit of the beneficiaries. The trustee may choose to invest or spend the trust assets, depending on the trust document and the wishes of the settlor. The trustee should also be prepared to provide accurate accountings to the beneficiaries and keep records of all transactions.

There are several different types of trusts, and they all have their own purposes. For example, a lifelong income trust provides a fixed stream of payments to the grantor, while a testamentary trust is created through a will and becomes irrevocable upon the grantor’s death. Irrevocable trusts can provide tax benefits, such as protection of assets from creditors and reduction of estate taxes.

The concept of trust has received attention from various disciplines, including sociology, public policy and psychology. A prominent definition of trust was proposed by public relations professor Leonard Grunig: “A willingness to open oneself to a risk, based on the perception that a person or organization is fair and just, can be relied on to do what they say they will do, and has the capacity to do so.”

In estate planning, a trust can play an important role in the transfer of wealth from one generation to the next. Trusts can be used to minimize the impact of taxes, provide for special needs, or protect a family’s privacy. Trusts can be structured in many ways, and they are often complex and involve multiple legal documents.

Some research indicates that there are biological components to trusting behavior. For example, Brown University professor Rose McDermott has cited research showing that people with higher concentrations of the hormone oxytocin are more willing to engage in social bonding and other behaviors that are precursors to trust. However, she cautions that the biology of trust involves human universals and is more complex than oxytocin levels alone.

Developing and maintaining trust takes time and effort. A person who wants to build trust must be consistent in his or her actions, and he or she must be transparent about any new beliefs or views that he or she may have. It is also important to avoid trying to please others in order to gain their trust, since this type of behavior can destroy relationships and lead to distrust.

Trustees must be careful to avoid making missteps that could damage the trust and beneficiaries’ interests. For example, it would be illegal for a trustee to make a bad investment that will result in financial loss to the beneficiaries. Likewise, it is not appropriate for trustees to withhold distributions to beneficiaries unless the trust terms allow them to do so. This can be viewed as breach of fiduciary duty and may result in lawsuits.