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Trust

Legal entity (trustee) in which property and funds are held and managed by either a person or third party for a beneficiary. Two types are living trust and testamentary trust.
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UK: An arrangement under which property is transferred to a person called the trustee or several such persons. Trustees are under an obligation to keep the property or deal with it for the benefit of others, the beneficiaries. The trust is created by a trust deed. Occupational pension schemes are set up under trust deeds. See PARTNERSHIP; MARRIED WOMEN’S PROPERTY ACT 1882; TRUST POLICIES.
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An arrangement under which a donor transfers property to a trustee who manages and distributes the property in accordance with the terms of a trust agreement for the benefit of a trust beneficiary.

Trust (Estate)

An arrangement used in situations where beneficiaries are not yet given control of the property that belongs to them. A trustee manages this property until a predetermined time, where control is relinquished to the beneficiary.

Trust agreement

Legal document that sets up a trust fund, allocates specific assets contained in the trust, and states rules for carrying out the duties and responsibilities of the trustee for investing and administration.
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An agreement under which certain assets are deposited by one party (the grantor), for the sole benefit of another party (the beneficiary), into an account managed by a third party (the trustee). In reinsurance, such an agreement is typically established to permit a licensed cedant to take credit for non-admitted reinsurance up to the value of the assets in trust.

Trust Agreements

An agreement establishing a trust arrangement, which may be utilized as a mechanism by the reinsurer for purposes of securing its obligations to the ceding company to satisfy securitization requirements that might apply to the reinsurer under the terms of a reinsurance agreement. Under the trust arrangement, a legal entity is created by a grantor (usually the reinsurer) for the benefit of a designated beneficiary (usually the ceding company). The trustee (generally a financial institution) holds a fiduciary responsibility to handle the trust’s corpus assets and income for the economic benefit of the beneficiary, in accordance with the terms of the trust. In the event that the reinsurer defaults in its payment obligations to the ceding company under the terms of the reinsurance agreement, the trustee may release funds from the corpus of the trust to satisfy such obligations to the ceding company, in accordance with the terms of the trust. In reinsurance, such an agreement is typically established to permit a licensed ceding company to take credit for non-admitted reinsurance up to the value of the assets in the trust.

Trust deed

The legal document setting out the responsibilities of the trustees, i.e. holders of property, and the rights of the beneficiaries. In the case of unit trusts the trust deed concerns the trustees and the fund managers and lays down the framework within which managers must operate.

Trust fund

1. Type of employer’s funding instrument for retirement accounts and employee benefits. The other types are an insured plan or combination plan . 2. Separate account in the U.S. Treasury, mandated by Congress, whose assets may be used only for a specified purpose. For the supplementary medical insurance (SMI) trust fund, monies not withdrawn for current benefit payments and administrative expenses are invested in interest-bearing federal securities, as required by law; the interest earned is also deposited in the trust fund.