Massachusetts Trust Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Massachusetts Trust, written in plain English, along with examples of how it is used.

What is Massachusetts Trust?

Massachusetts Trust is the trust formed by shareholders of a business entity by transferring their right in the business to the trust in lieu of a certificate form the trust, authorizing the trust so formed to participate in the management of the business on behalf of them . A massachusetts trust is similar to a limited partnership such that the maximum liability of the trust certificate holders are limited to the extend of shares already transferred to the trust

History and Meaning of Massachusetts Trust

A Massachusetts Trust is a type of business entity formed as a trust under Massachusetts law. This type of trust enables shareholders to transfer their rights of interest in a business to the trust, allowing the trust to manage and operate the business on their behalf. Massachusetts Trusts have been around since the late 1800s and were initially used for real estate and railroad investment trusts. The state of Massachusetts passed a law in 1921 that allowed the creation of business trusts, which expanded their usage to include more industries.

In a Massachusetts Trust, the trustees manage the assets of the trust and are responsible for the management and operation of the business that holds those assets. The certificate holders of the trust receive a certificate of ownership that entitles them to a share of the trust's profits and assets. Massachusetts Trusts are a popular choice for investment funds, real estate deals, and partnerships.

Examples of Massachusetts Trust

  1. ABC Real Estate Trust is a Massachusetts Trust formed to acquire and manage commercial real estate in the Boston area. The trust's certificate holders receive a share of the trust's rental income and profits.

  2. XYZ Investment Fund is a Massachusetts Trust created to manage a portfolio of stocks, bonds, and other securities. The trust's certificate holders receive a share of the fund's investment income and capital gains.

  3. John and Jane Doe formed a Massachusetts Trust to manage their family business, which produces and sells specialty foods. The trust's certificate holders, including John and Jane Doe, have limited liability for the debts and obligations of the business.

Legal Terms Similar to Massachusetts Trust

  1. Limited Liability Partnership (LLP) - a type of partnership in which partners' liability is limited to the extent of their investment in the partnership.

  2. Limited Partnership (LP) - a type of partnership in which some partners have limited liability and are not involved in the management of the business.

  3. Real Estate Investment Trust (REIT) - a trust or corporation that owns and operates income-producing real estate, and distributes the profits to shareholders as dividends.

  4. S-Corporation - a type of corporation that is taxed like a partnership, where profits and losses are passed through to shareholders and are only taxed at the individual level.

  5. C-Corporation - a type of corporation that is taxed separately from its owners and shareholders, with profits and losses belonging to the corporation.