Many people assume that all trusts are one in the same. However, this is not actually the case. While it’s true that all trusts are similar in nature, “trust” is an umbrella term that actually covers two, distinct categories: private and public trusts.
So, public trust vs. private trust: what’s the difference? Today, our legal team at Dana and Associates LLC is here to break that down for you. By the time you’ve finished reading, you will have everything you need to determine which trust works best for you.
Ready to learn the difference between a public and private trust? Let’s dive in.
What Is a Public Trust?
A public trust is established for the sole benefit of society (or a specific part of society), and it typically supports a religious and/or charitable purpose.
The beneficiaries of public trusts are registered societies or entities.
Because their goal is to benefit the public as a whole, common examples include welfare, schools, roads, and military trusts.
What Is a Private Trust?
On the other hand, private trusts are made to benefit private individuals, such as one’s family or close friends.
Therefore, the beneficiaries of a private trust are named individuals.
Private trusts can be further categorized into revocable and irrevocable trusts.
Revocable trusts, also known as living trusts, can be altered over time, while irrevocable trusts cannot.
Public Trust vs. Private Trust: What’s the Difference?
So, now that we’ve covered both public trusts and private trusts, what is the difference between the two? While both kinds of trusts have beneficiaries, trustees, and grantors, here are some of the key differences:
- Beneficiaries. As we mentioned, the beneficiaries of public trusts are public entities or charities, while the beneficiaries of private trusts are specific individuals.
- Privacy. Public trusts are open for inspection under the public eye, while private trusts can only be viewed by lawyers and beneficiaries.
- Trustees. Usually, public trusts are managed by a board of trustees, while private trustees have either a managing trustee or a few appointed trustees.
- Lack of will. If someone passes away with a private trust and no will, according to Arizona laws on intestate succession, their closest relatives will receive their assets. On the other hand, if someone passes away with a public trust and no will, no assets will be administered to any entity unless specifically listed.
- Lifespan. A public trust may last for an indefinite amount of time, while private trusts terminate when their private purpose has been completed.
Top-Rated Estate Planning Lawyers in Phoenix, AZ
Hopefully learning more about the differences between public trusts and private trusts has proven to be helpful for you.
As a top-rated estate administration and probate law firm in Arizona and Southern California, our legal team here at Dana and Associates is here to help you through every step of the estate planning process.
With Dana and Associates by your side, you can rest assured that your affairs will be handled with mindfulness and compassion.
Browse our service page to learn more about what we can do for you or contact our legal team today for a free consultation.
