Trusts are commonly classified in two ways. The first way is by the duties of the trustee. The second way is by the intent, if any, of the settlor to create a trust. This article discusses generally these two ways of classifying a trust.

Active or Passive

The first classification of a trust relates to whether or not the trust is legally in existence. Ordinarily, a trust is an active trust, meaning a trust in which the trustee has some affirmative duty to perform with respect to the trust property. Ordinarily, the affirmative duty is to manage the property for the beneficiary (e.g., the trustee manages a large farm until the settlor's minor child is capable and learns to manage the farm).

Where a trustee merely holds legal title and has no affirmative duty to perform with respect to the trust property, the trust is a passive trust. A passive trust is a trust merely "on paper." In many states, a passive trust is prohibited. In many states, when an active trust becomes a passive trust, the trust property must be transferred to the beneficiary or beneficiaries, or their personal representative. In some states, a trust in which the only duty of the trustee is to execute and deliver a deed to a beneficiary is a passive trust.

Intent

The second classification of a trust relates to the purpose of the trust according to the intent of the creator of the trust.

The first division in the second classification is who is creating the trust. A good place to start is with the trust created by a court rather than by a settlor. Courts sometimes create a trust as a remedy for some injustice. This kind of trust is known as a constructive trust. In effect, the wrongdoer is forced to be the settlor and initial trustee of a trust for the benefit of the person or persons who were wronged. Ordinarily, the constructive trust is in place until the trust property is passed to the beneficiary or beneficiaries, or their personal representative.

Ordinarily, a trust is created by a settlor, not a court. The second division is whether the settlor's intent was express or implied. If the intent is implied, the trust is known as an implied trust or a resulting trust. If the intent is express, the trust is known as an express trust or a formal trust.

The third division is between two kinds of express trusts. The third division is whether the beneficiary is private or public. If the beneficiary is private and not a charity, the trust is a private express trust. If the beneficiary is a charity or for a charitable purpose, the trust is charitable trust or public trust.