Trust is an abstract concept, but one that is critical to many aspects of life. Whether it is in the relationship between husband and wife, employer and employee, or friends and family, trust is an essential part of daily living. Trust also takes on concrete forms, such as the trust that keeps your money safe when you loan it to someone or the trust that preserves wildlife habitats from development. In business, a company’s reputation is built on its ability to maintain this trust with stakeholders and customers. A successful company needs to develop the right mix of policies, practices and procedures that will allow it to thrive in this environment.

The foundation of a trust is the legal obligation that the trustee has to deal with the property in accordance with the instructions contained in the trust document. The person who creates a trust is known as the “grantor” or “settlor.” The beneficiaries are the persons who receive income and other distributions from the trust. A trustee is a fiduciary who is required to carry out the interests and wishes of the grantor and beneficiaries.

A trust can hold any type of property, including cash, stocks and bonds, real estate or even a business. A common use of a trust is to keep assets safe from creditors after death or to protect them from family members who might sell, spend or otherwise disperse them inappropriately. A trust can also be used to preserve a family’s privacy, as the terms of a trust are typically not public.

Trusts are generally geared toward high-net-worth individuals and families, but they can be useful for anyone who wants to ensure that their loved ones will receive the care they need after their death. For example, a special needs trust can be set up to ensure that a disabled or mentally ill individual will receive adequate care. Another common reason for a trust is to take advantage of tax benefits. In addition to avoiding probate costs, trusts can shelter assets from estate taxes and from claims of creditors after death.

Several workshop attendees addressed the question of what defines trust. Rose McDermott of Brown University suggested that the biological component of trust may be tied to a person’s oxytocin concentration, which is associated with social bonding and other mammalian functions. However, she cautioned that other factors, such as an individual’s moral character and the ability to withstand risk, are also important in building trust.

Generally, it is a good idea to review the trust documents prior to transferring any assets to a trustee. It is also important to establish a line of communication with the trustee to understand his or her role and to be sure the trustee can fulfill any conditions that may exist in order for the beneficiary to receive funds. Lastly, it is helpful to remember that any titled assets (cars, trucks, stock, bonds, savings/checking accounts, certificates of deposit and insurance policies) must be retitled in the trustee’s name so that distributions are recorded correctly with all titling agencies.