PASSIVE TRUST Meaning and
Definition
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Passive trust is a term used in legal and financial contexts to refer to a specific type of trust arrangement where the trustee has a limited role in managing the trust assets. In a passive trust, the trustee's primary responsibility is to hold and safeguard the assets on behalf of the beneficiaries, without actively managing, investing, or making decisions regarding those assets.
Unlike an active trust, where the trustee is given significant discretion and authority to manage and control the trust's assets, a passive trust places more control and decision-making power in the hands of the beneficiaries. The trustee is expected to act in a more custodial or administrative role, simply acting as a caretaker for the trust property.
Typically, a passive trust is established when the grantor or settlor wants to ensure that specific assets are preserved and protected, rather than taking on the risks and responsibilities of active management. This may be the case when the beneficiaries are capable of managing the assets themselves, or when the grantor wants to limit the trustee's involvement to basic administrative tasks.
The exact terms and conditions of a passive trust will be detailed in the trust agreement or document. It may outline the trustee's limitations and responsibilities, the rights and entitlements of the beneficiaries, and any specific instructions or restrictions on the use or distribution of the trust assets.
Common Misspellings for PASSIVE TRUST
- oassive trust
- lassive trust
- -assive trust
- 0assive trust
- pzssive trust
- psssive trust
- pwssive trust
- pqssive trust
- paasive trust
- pazsive trust
- paxsive trust
- padsive trust
- paesive trust
- pawsive trust
- pasaive trust
- paszive trust
- pasxive trust
- pasdive trust
- paseive trust
Etymology of PASSIVE TRUST
The word "passive" comes from the Latin word "passivus", which means "capable of being acted upon" or "receptive". It is derived from the verb "pati", meaning "to suffer" or "to endure". "Trust" comes from the Old Norse word "traust", which means "confidence" or "reliance". It is related to the Old English word "treowian", meaning "to believe", and the Proto-Germanic word "traustam", meaning "security" or "firmness".
When these two words are combined, "passive trust" refers to a type of trust where one party puts their confidence in another without taking active or direct control or involvement. It implies a belief in someone's reliability, competence, or integrity while being receptive to their actions or decisions.
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