How Trusts Work: Purpose, Parties, and Protections

How does a trust separate ownership, control, and benefit to serve a purpose over time?

How Trusts Work: Purpose, Parties, and Protections (formerly Trust Fundamentals Module 1) introduces the core structure of a trust and explains why families use trusts to support protection, continuity, and long-term purpose. Learners examine how legal ownership is separated from beneficial enjoyment, how trusts are created and categorized, how beneficiaries may receive income, capital, or other forms of benefit, and how the settlor, trustee, beneficiaries, and additional parties fit together. The module also introduces the practical and tax considerations that can arise when a trust holds income-producing or non-liquid assets.

What You'll Be Able to Do On the Other Side

By the end of this module, learners will be able to:

• explain why trusts separate legal ownership from beneficial enjoyment;
• describe how trusts may support protection, continuity, and purpose;
• categorize a trust as inter vivos or testamentary, revocable or irrevocable, and discretionary or non-discretionary;
• identify the Three Certainties required to establish a trust;
• distinguish trust capital from trust income;
• recognize how beneficiaries may receive value through cash distributions, property, paid expenses, use of an asset, or other indirect benefits;
• explain why distributing a non-liquid asset may require consideration of liquidity, valuation, control, fairness, tax, and trust purpose;
• identify the settlor, trustee, beneficiaries, and common additional parties to a trust; and
• locate the core structural elements of a trust in a simplified Canadian trust deed.

The Experience

This module combines concise readings, visual explanations, classification activities, reflection prompts, and practical examples designed for accessible, screen-based learning. Curated expert insights from Cindy Radu and Professor Albert Oosterhoff clarify the trust relationship and the requirements for creating a valid trust. Video examples illustrate how trust income may be retained or distributed, while a simplified Canadian trust deed gives learners an opportunity to identify the parties, property, Three Certainties, trustee authority, succession provisions, and termination terms in a realistic document.