Introduction to Business Trust

What is a Business Trust?

There is a three-way relationship in the business trust. The formation of a
business trust gives rise to an obligation on the part of the trustee to
administer the assets and as well as the properties of the business for the
interest of the beneficiaries in accordance with the stipulation set forth in the
declaration of trust.
Business trust is a kind of arrangement wherein the title of the property is
transferred to one or more trustees for the advantage of one or more
beneficiaries. Property, once invested, is already fixed and irrevocable,
unless there is a contrary provision in the law or the stipulation of the
parties.
Others would define business trust as a manner of combining resources by
individuals to start a business for the purpose of generating profit. It is
created when the legal title of the property is conveyed to the trustee.
The trustee is the one who is in charge with the control and the management
of all assets constituted in the business trust. The person who has a
beneficial interest in the contract of trust is then paid profits generated from
the assets.
However, there are other additional benefits of business trust other than the
protection and conservation of the thing entrusted.
Complexity of Business Trust in Law
A suitable legal organization is needed for the protection of your business
venture under certain adverse circumstances.
Trust law is complicated for neophytes. It involves the application of
combined principles of law in many different fields such as laws regarding
property, equity, and taxation.
The trustee appointed by the settlor is in charge with the control and
management of the business trust. There is no provision on the law
specifying who could be trustees. Most of the times, trustees appointed are
professionals, however, family or friends of the settlor may be allowed to be
one.

The ownership of the assets entrusted to the trustee is conveyed to the trust.
The trustees could select their chairman and a manager to run the business
regularly.
The minutes are also required to be filled by recording the activities of the
trust in accordance with the Declaration of Trust. The minutes and as well as
the trust indenture manifest that the trustees are bound on what have been
agreed upon.
The trustees further take an oath of affirmation to be bound on the
resolutions and the indenture. However, the minutes may be subject to
restriction, vacation, substitution, or amendment.