Can a Trust Enter Into a Contract?
When you’re managing a family trust or working on a real estate transaction involving trust property, one question comes up repeatedly: can a trust actually sign on the dotted line?
The answer matters more than you might think. In fact, the answer can depend on the specific circumstances, such as the type of trust, the nature of the transaction, and the applicable law. Getting it wrong can mean unenforceable agreements, unexpected personal liability, and costly litigation. Whether you’re a trustee trying to sell real property, a lender extending credit to a trust, or a landlord leasing to one, understanding who the actual contracting party is will save you significant headaches.
This guide breaks down everything you need to know about how trusts interact with contracts, who bears the risk, and how to structure your documents correctly in 2024 and beyond.
Short Answer: Can a Trust Enter Into a Contract?
The direct answer is no—under common law principles, a trust itself cannot enter into a contract because it lacks legal personhood. A trust is not a separate legal entity like a corporation or LLC; trusts are not corporations and cannot act as legal persons. Instead, contracts are made by the trustee acting on behalf of the trust.
This distinction is foundational to trust law. As articulated in Bogert’s Trusts and Trustees, a trust is described as a relationship rather than a juridical person. The trust exists as a fiduciary arrangement between the settlor, trustee, and beneficiaries—but it cannot independently sue, be sued, or execute documents in its own name.
When a contract is signed “for” a trust, the trustee is the party to the agreement. The trustee holds legal title to trust assets and exercises the authority provided by the trust deed and applicable statute. They act in a fiduciary capacity, meaning their powers and obligations flow from their role as the person managing the trust estate for the benefit of the beneficiaries.
That said, some statutory trusts—like Delaware statutory trusts or Massachusetts business trusts—have specific legislative frameworks that make them function more like entities for certain purposes. Even in these cases, however, there’s typically a trustee or governing body that actually signs the contract. The trust name may appear on the agreement, but the execution still runs through someone with legal capacity to bind the trust.
This distinction matters enormously for determining who can sue if the contract is breached, who is personally liable if things go wrong, and from which assets a judgment can be satisfied. Getting the signature block wrong can expose a trustee to personal liability they never intended to assume.
Because a trust is not a legal entity, an attorney typically represents the trustee rather than the trust itself.
What Is a Trust Legally? Relationship vs. Entity
A trust is fundamentally a fiduciary relationship—not a company, not a person, not a thing you can point to on a government registry. When someone creates a trust, they establish a legal arrangement where one party (the trustee) holds and manages property for the benefit of others (the beneficiaries), according to terms set by the creator (the settlor).
Attorneys must be careful to identify the correct clients when dealing with trusts, as the trust itself is not a legal entity. This means legal representation may be for the trustee, the estate, or the beneficiaries individually, depending on the circumstances.
It is important to respect the distinction between a trust as a fiduciary relationship and as a legal entity, as this impacts legal titles, attorney roles, and how contracts are entered into or enforced.
The Traditional Common Law View
Under traditional principles that still govern most trust administration today, the trust is understood as:
A relationship between settlor, trustee, and beneficiaries
A pool of assets (the trust estate) held for specific purposes
Legal title vested in the trustee
Equitable interests belonging to the beneficiaries
This means the trust cannot hold legal title in its own name in most contexts. It cannot sue or be sued independently. And it cannot sign or be named as a party to a contract without the trustee acting as the legal party.
Consider a typical example: the Johnson Family Trust created in 2015 to hold a house. The trust deed names Sarah Johnson as trustee. When the family decides to sell the property in 2024, Sarah Johnson—as trustee—is the person who signs the purchase agreement, not “The Johnson Family Trust” acting on its own.
Modern Statutory Accommodations
Some modern statutes—including variations of the Uniform Trust Code adopted across many states between 2000 and 2024—allow property records and court pleadings to reference the trust by name as shorthand. You might see a deed recorded to “The Johnson Family Trust dated March 3, 2015” on the county recorder’s records.
But this administrative convenience doesn’t transform the trust into a person. The underlying rule remains: the trustee is the legal actor. When litigation arises, interested parties will need to identify the trustee as the proper defendant or plaintiff. When contracts are executed, the trustee’s signature is what binds the trust assets.
Who Actually Signs? Trustee Capacity and Contract Execution
In every transaction involving a trust, the contracting party is the trustee—not the trust itself. The trustee must be identified in the document by their full legal name and their capacity as trustee.
A properly drafted signature block looks something like this:
Jane Doe, as Trustee of the Doe Family Trust dated June 1, 2012
Simply writing “Doe Family Trust” without identifying the trustee creates ambiguity about who is actually bound and can lead to enforcement problems.
Signing in Fiduciary Capacity
When trustees sign contracts, they act in a fiduciary capacity. This means:
They’re acting for the benefit of the beneficiaries, not themselves
They exercise powers granted under the trust deed and applicable law
They should not be personally bound beyond trust assets if they properly disclose their representative status
The key phrase is “properly disclose.” A trustee who fails to indicate they’re acting as trustee—rather than in their personal capacity—may find themselves personally liable on the contract. Courts have consistently held that counterparties are entitled to know whether they’re contracting with an individual or with someone acting for a pool of assets.
Corporate Trustees
Many trusts, particularly larger estates and institutional arrangements, use corporate trustees—banks, trust companies, or professional fiduciaries. These entities are themselves legal persons.
When a corporate trustee signs, the signature block typically reads:
ABC Trust Company, as Trustee of the XYZ Trust, by: [Officer Name], Vice President
The corporate trustee is the party, and an authorized officer executes on its behalf. This adds a layer of clarity because the corporate trustee has its own existence, registration, and governance structure.
Common Transaction Types
Different transactions require attention to these principles:
Buying Real Estate in 2024: The deed should be made to the trustee in their capacity as trustee. The purchase agreement should clearly identify the trustee as the buyer, with language like “John Smith, Trustee of the Smith Family Trust u/d/t July 15, 2018.”
Vendor Contracts for Trust-Owned Businesses: If a trust owns a small business, contracts with suppliers, service providers, or customers should name the trustee as the contracting party. The contract should reference the trustee’s authority under the trust deed.
Opening Brokerage Accounts: Financial institutions require documentation proving the trust exists and that the trustee has authority. The account is typically titled in the trustee’s name as trustee, not solely in the trust’s name.
Is a Trust Ever Treated Like a Legal Entity?
Although the classical rule says a trust is not a legal entity, modern legislation and practice have created situations where the line blurs considerably.
However, regardless of statutory accommodations, trusts created for unlawful purposes or contrary to public policy may be deemed invalid.
Private Express Trusts vs. Statutory Business Trusts
Private express trusts—your typical family trust, living trust, or testamentary trust created under wills—remain purely fiduciary relationships. They don’t file formation documents with the state. They don’t appear on any public registry as “entities.” The trustee is simply a person managing property subject to the trust terms.
Statutory or business trusts are different. These are creatures of specific statutes that grant them some entity-like characteristics for particular purposes.
Delaware Statutory Trusts
Delaware statutory trusts (DSTs) are commonly used in investment funds, 1031 exchange structures, and securitizations. They must file with the Delaware Secretary of State and receive a certificate of trust. DSTs can:
Hold property in the trust name
Sue and be sued
Enter into contracts referenced in public filings
If you review EDGAR filings from the Securities and Exchange Commission, you’ll find examples like: “Trust Agreement dated January 5, 2016, for XYZ Investment Trust, a Delaware statutory trust, entering an underwriting agreement with ABC Securities LLC.”
Even here, though, the governing trust agreement defines who has signing authority—typically a trustee, managing owner, or similar role. The statute creates a framework that makes the trust look more like an entity, but governance still runs through designated persons.
Massachusetts Business Trusts
Massachusetts business trusts have been used historically for real estate syndications and mutual funds. State case law and statutes grant them certain entity-like features, including the ability to hold title and conduct business operations. Many mutual funds are technically structured as Massachusetts business trusts.
International Variations
Different common law jurisdictions have taken varying approaches:
England and Wales: Trusts remain firmly non-entity relationships, though the Trustee Act 2000 modernized trustee powers
Australia and New Zealand: Courts and legislatures have addressed whether trusts can hold title or appear in litigation in the trust name, with some procedural accommodations
Canadian provinces: Similar to U.S. states, some have specific business trust legislation while private trusts remain traditional fiduciary relationships
The takeaway: even where statute allows a trust to “act” more like an entity, the underlying fiduciary nature typically remains. Someone—the trustee or statutory equivalent—must exercise the powers and bear the fiduciary duties.
Trustee Authority, Personal Liability, and Risk Allocation
Whether a contract is enforceable—and against whom—depends on three critical factors:
The trustee’s authority under the trust deed and applicable law
How the contract is drafted
Whether the trustee properly disclosed their representative capacity
Understanding Trustee Authority
Trust deeds drafted between 2010 and 2024 typically include detailed powers clauses authorizing the trustee to:
Buy, sell, and lease real property
Borrow money and grant security interests
Enter into contracts necessary for trust administration
Hire professionals and pay expenses
Make distributions to beneficiaries
A trustee acting within these powers binds the trust estate. But acting beyond the authority provided—ultra vires actions—may:
Constitute a breach of fiduciary duties
Expose the trustee to personal liability
Potentially void the contract as against the trust
Counterparties entering significant agreements should verify the trustee has authority for the specific transaction. This is where trust certificates become valuable—they summarize the trustee’s powers without requiring disclosure of the entire trust deed.
Modern Rules on Personal Liability
Under many modern statutes, including versions of the Uniform Trust Code adopted since 2000, a trustee is not personally liable on a contract if:
They entered the contract in a fiduciary capacity
They properly disclosed their trustee status
They acted within their authority
The liability attaches to trust assets, not the trustee’s personal assets.
But if the trustee fails to disclose their representative capacity, the counterparty may treat them as personally bound. This is why signature blocks matter so much.
Practical Scenarios
Scenario 1: Commercial Lease (2021)
A trustee signs a five-year lease for office space owned by the trust. The lease clearly identifies the trustee in their capacity as trustee of the named trust. The landlord later claims unpaid rent.
Result: The landlord can pursue the claim against trust assets. The trustee is not personally liable unless they signed a personal guarantee or acted outside their authority.
Scenario 2: Construction Contract (2023)
A trustee hires a contractor to renovate trust property. The contract simply names “Smith Trust” as the owner, with the trustee’s signature but no capacity language.
Result: Ambiguity exists. The contractor might argue the trustee signed personally. Litigation could ensue over whether the trustee is personally liable or only the trust assets are at risk.
Best Practices for Trustees
When entering contracts as trustee:
Always identify yourself as “Name, as Trustee of [Trust Name] dated [Date]”
Include recitals describing the trust and your powers
Add indemnity provisions where the trust indemnifies you from trust assets
Consult an attorney before major transactions—real estate sales, significant borrowing, business acquisitions
Keep records documenting your authority and decision-making process
Never sign in your own name without the trustee designation
Practical Drafting and Transaction Tips When Dealing With a Trust
If you’re a landlord, buyer, lender, or vendor contracting with a trustee, you need to ensure your agreement will actually be enforceable. Here’s how to protect your interests.
Naming the Parties Correctly
The most fundamental drafting issue is party identification:
Always identify the trustee by full legal name and capacity—not just the trust name
Reference the trust by its complete name and date of creation: “The Miller Family Trust dated October 10, 2015”
Avoid listing only the trust name without a trustee—this creates ambiguity about who is bound
A proper party description reads: “Robert Miller, as Trustee of The Miller Family Trust dated October 10, 2015 (‘Trustee’).”
Due Diligence Steps
Before signing, verify what you’re dealing with:
Obtain a trust certificate or abstract signed and dated (as of 2024) confirming:
The trust exists
The named trustee is currently serving
The trustee has authority for this type of transaction
Any limitations on the trustee’s powers
Confirm trustee identity through government-issued ID or, for corporate trustees, registration documents
Check whether multiple trustees must sign—many trusts require co-trustees to act jointly
Verify no resignations or deaths have occurred affecting trustee status
Signing Formalities
Proper execution prevents enforcement problems:
Individual Trustee Signature Block:
Corporate Trustee Signature Block:
For real property transactions or long-term leases, check jurisdictional requirements for witnessing and notarization. Some states require specific language or acknowledgment forms for trust transactions.
If a power of attorney is being used because the trustee cannot sign in person, ensure the POA specifically authorizes the agent to act for the trustee in their trustee capacity.
Checklist for Counterparties
Before executing any significant contract with a trustee:
[ ] Review the trust deed or certificate for limits on the trustee’s authority—particularly restrictions on borrowing, granting security, or selling assets below market value
[ ] Clarify guarantee terms if the trustee is also providing a personal guarantee—the document should explicitly state whether the guarantee is given in a fiduciary or personal capacity
[ ] Confirm liability allocation if trust assets prove insufficient to satisfy the contract—will you have any recourse against the trustee personally, or is your recovery limited to the trust estate?
[ ] Document the trustee’s representations about their authority, the trust’s solvency, and their compliance with the trust terms
[ ] Consider title insurance for real estate transactions to protect against defects in the trustee’s authority or the trust’s chain of title
Jurisdictional Variations and When to Get Professional Advice
How far a trust can act like an entity—and how contracts should be structured—varies significantly by jurisdiction and trust type.
In estate administration, the personal representative is the key party, and attorneys generally represent the personal representative rather than the estate or beneficiaries.
U.S. Variations
Different states have adopted different approaches:
Delaware: Robust statutory trust framework with entity-like characteristics for business trusts
California: Case law has addressed whether a trust can be sued in its own name, with courts generally requiring the trustee as the proper party
Florida: Specific provisions in the trust code regarding how trusts appear in litigation and on property records
States adopting the Uniform Trust Code: Generally consistent rules on trustee contracting authority and liability limitations
International Perspectives
In Canada, the Canada Deposit Insurance Corp. v. Canadian Commercial Bank decision clarified that contracts signed for trusts remain valid but attribute liability and rights to the trustee. Similar principles apply in the U.K. and Australia, though procedural rules vary.
Courts in common law jurisdictions have published decisions between 2005 and 2023 wrestling with questions like:
Can attorneys represent “the trust” or only the trustee?
Can pleadings name a trust as a party?
How should property registers reflect trust ownership?
The answers aren’t uniform, which creates traps for cross-border transactions.
When to Consult an Attorney
Seek professional legal advice when:
Entering high-value contracts (such as selling a $1.5M trust-owned property in 2024)
Using a business or statutory trust as an investment vehicle
Dealing with cross-border issues (a Canadian trustee contracting for U.S. real estate)
Facing capacity questions about a settlor who created or amended the trust
Structuring complex transactions that push the boundaries of trustee authority
Estate administration and trust administration involve ongoing legal obligations. An experienced lawyer can help you navigate the relevant rules in your jurisdiction and structure transactions to minimize risk.
The Core Principle
Whatever jurisdiction you’re in, the fundamental rule remains consistent:
Treat the trust as a relationship and the trustee as the contracting party unless a specific statute clearly provides otherwise.
A trust is not a person. It cannot walk into a room, shake hands, and sign an agreement. The trustee is the human (or company) that does those things—and the trustee is the party you’re contracting with.
Correctly structuring contracts from the outset protects everyone involved. Trustees avoid unintended personal liability. Counterparties know exactly who they can hold responsible. And when disputes arise, courts have a clear answer about whose assets are at stake.
Key Takeaways
A trust itself cannot enter into a contract—the trustee contracts on the trust’s behalf
Always identify the trustee by name and capacity in any contract
Verify trustee authority before signing significant agreements
Distinguish between private express trusts (pure fiduciary relationships) and statutory business trusts (which may have entity-like features)
Proper disclosure of trustee status protects against personal liability
Jurisdictional rules vary—when in doubt, consult a trust law attorney
Understanding these principles isn’t just academic. It’s the difference between an enforceable agreement and a document that leaves you chasing the wrong party—or, worse, finding yourself personally liable for obligations you thought belonged to the trust estate.