Business Trust Law and Legal Definition

Business trust is a form of business organization which is similar to a corporation, in which investors receive transferable certificates of beneficial interest. The trustees are administer it for the advantage of its beneficiaries who hold equitable title to it. They administer the trust based on the terms set forth in the declaration of trust. The beneficiaries receive certificates of beneficial interest as evidence of their interest in the trust, which is freely transferable. Profits and losses resulting from the use and investment of the trust property are shared proportionally by the beneficiaries according to their interests in the trusts.

In some states, a business trust is subject to the laws of trusts whereas in other states the laws of corporations or partnerships govern its existence. For purposes of federal Income Tax laws and state income tax laws a business trust is considered as a corporation.

Business trusts are also known as Massachusetts trusts or common-law trusts.