Agency vs Trust: Difference between revisions
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But there are other differences between trust and agency are: | But there are other differences between trust and agency are: | ||
: a) An agency relationship can be created ''without vesting any property'' in the agent, whereas title to property under a trust must be vested<Ref>vested means secured in the possession of or assigned to a person.</Ref> in a trustee. | |||
: {style="text-align: center; color: green;}"a) An agency relationship can be created ''without vesting any property'' in the agent, whereas title to property under a trust must be vested<Ref>vested means secured in the possession of or assigned to a person.</Ref> in a trustee. | |||
:: A trust only exists if it holds property. | :: A trust only exists if it holds property. | ||
: b) The agent himself does not have to be party to contracts. A trustee who makes a contract in the administration of the trusts contracts as principal, whereas an agent creates a contract on behalf of the principal, he himself is not a party to the contract with another party. | : b) The agent himself does not have to be party to contracts. A trustee who makes a contract in the administration of the trusts contracts as principal, whereas an agent creates a contract on behalf of the principal, he himself is not a party to the contract with another party. | ||
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: c) At common law the relationship of principal and agent terminates on the death of either. If a trustee dies, however, the trust is not terminated. | : c) At common law the relationship of principal and agent terminates on the death of either. If a trustee dies, however, the trust is not terminated. | ||
:: Instead, a new trustee is appointed. | :: Instead, a new trustee is appointed. | ||
== Footnotes == <references /> | |||
{{Template:Gregory-info}} | |||
Revision as of 19:50, 27 December 2014
"Agency accounts differ from trusts in that title to the assets in the agency does not pass to the trustee, but remains in the name of the owner of the property, who is referred to as the principal."
Acting like an agent is not being an agent if you are also a trustee.
There is no beneficiary in an agency but only the principal and an agent. A key difference between a trust and an agency account is that there is no legal transfer of title in an agency account.
Agent is a person that acts on behalf of another. In an agency relationship, the agent is hired by the principal (client) to perform specific services. The agent acts with the principal's authority and remains under the principal's control. The agent does not take title to any of the principal's property. The agent's fiduciary responsibility is to carry out the wishes of the principal.
But there are other differences between trust and agency are:
- {style="text-align: center; color: green;}"a) An agency relationship can be created without vesting any property in the agent, whereas title to property under a trust must be vested[1] in a trustee.
- A trust only exists if it holds property.
- b) The agent himself does not have to be party to contracts. A trustee who makes a contract in the administration of the trusts contracts as principal, whereas an agent creates a contract on behalf of the principal, he himself is not a party to the contract with another party.
- A trustee opens accounts as principal of the account which holds property.
- c) At common law the relationship of principal and agent terminates on the death of either. If a trustee dies, however, the trust is not terminated.
- Instead, a new trustee is appointed.
== Footnotes ==
- ↑ vested means secured in the possession of or assigned to a person.
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