← 1-Year PathQ1 · Foundations

Week 13 — Trusts & Legal Structures

What a trust is, the three parties involved, and how assets move through one.

Week 13 of 52 · ~6 hours · 13 slides · exam + project

📖 Study these courses this week

Complete these two courses, then do the Deep Dive below, pass the exam, and finish the project.

📚 What Is a Trust?The three-party structure: grantor, trustee, beneficiary. Legal containers.15 slides📚 Trust Types ComparedRevocable, irrevocable, grantor — which structure for which goal.15 slides

The Trust, Demystified

A trust is not a tax trick — it's a centuries-old way to hold and move assets.

What you will learn

  • Define the three roles in a trust
  • Distinguish revocable vs irrevocable
  • Understand how assets are held and distributed

Settlor, trustee, beneficiary

Settlor creates the trust Trustee holds legal title Beneficiary enjoys the benefit assets benefit The Trust (separate legal entity) Legal ownership vs beneficial ownership are SPLIT. This separation is what powers asset protection & estate planning.
Settlor, trustee, beneficiary

Fractionalizing an asset into trust units

Trust-Held Asset e.g. $100,000 property or business interest fractionalize UNIT1/100UNIT2/100UNIT3/100UNIT4/100UNIT5/100UNIT6/100UNIT7/100UNIT8/100One asset → 100 tradeable trust units (each a fractional beneficial interest)
Fractionalizing an asset into trust units

The three parties

Every trust has a settlor (who creates it), a trustee (who legally holds and manages the assets), and a beneficiary (who benefits). The key insight: legal title and beneficial interest are separated — the trustee owns, the beneficiary receives.

💡 A simple example

You (settlor) put a property into a trust for your child (beneficiary), with a bank as trustee. The bank holds legal title and manages the property; your child receives the income. The asset no longer belongs to you personally — it belongs to the trust.

Revocable vs irrevocable

A revocable (living) trust can be changed or dissolved — you keep control, but the assets remain part of your estate for tax purposes. An irrevocable trust generally can't be changed, and the assets leave your estate — but you give up control. The choice is control vs. separation.

Why use a trust?

Trusts provide: probate avoidance (assets pass without court), privacy (wills are public, trusts aren't), control (dictate how and when beneficiaries receive assets), and asset protection in some structures. They are planning tools, not magic.

The honest limits

A trust does not make income tax-free or shield you from every creditor. Revocable trusts offer no tax savings. Claims that trusts eliminate all tax or liability are misleading. Trusts are legitimate structures — and like all structures, their legality depends on honest use.

💡 Trusts in the AEON model

AEON's 'trust trading' uses the trust concept to fractionalize assets into tradeable units: an asset is placed into a trust, units are issued representing beneficial interest, and those units trade. The structure separates ownership from control — which is what makes the units tradeable.

❓ Quick check

In a trust, legal title is held by the:

A) Settlor
B) Trustee
C) Beneficiary
D) Court
(Knowledge check — full exam is next)

Key takeaways

  • Trust = settlor (creates) + trustee (holds) + beneficiary (receives)
  • Revocable = control; irrevocable = separation
  • Trusts are legitimate planning tools, not tax magic

📝 Weekly Exam — pass with 80% to unlock next week

10 questions. Review the Deep Dive and courses before attempting.

1. The three parties to a trust are:
Settlor/trustee/beneficiary.
2. Who holds legal title to trust assets?
The trustee holds legal title.
3. Who receives the benefit from a trust?
The beneficiary receives the benefit.
4. A revocable trust:
Revocable = you retain control.
5. An irrevocable trust:
Irrevocable = control given up for separation.
6. A key honest limitation of trusts is:
Trusts are not a tax-elimination trick.
7. A major benefit of a trust is:
Avoid probate + privacy + control.
8. In AEON's model, 'trust units' represent:
Units = fractional beneficial interest.
9. Separating legal title from beneficial interest is the essence of:
That separation defines a trust.
10. A will is ___ while a trust is typically ___:
Wills go through public probate; trusts stay private.
Your score: —

🛠 Weekly Project

Map a simple trust and its asset flow.

1
Draw (on paper or in the Lab) a diagram: Settlor → Trust → Beneficiary.
2
Label who holds legal title vs. beneficial interest.
3
Choose revocable or irrevocable for a sample goal and justify in one sentence.
4
Write one sentence on a legitimate reason YOU might use a trust.
Open tool →
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