(b) That's right. Trusts were not originally developed as business organisations, but they may be used as such.

A trust is created when one person, called the settlor, transfers the legal ownership of specified assets to another person, called the trustee, with instructions that the assets are to be administered for the benefit of persons identified as the beneficiaries of the trust.

A person who wants to use a trust as a means of operating a business could, as the settlor, vest the legal ownership of specified assets in a trust fund and appoint themselves as the trustee. They could also identify themselves as one of at least two beneficiaries.

To use a trust to run a business, the trustee must be given the authority to use the trust assets to run a business, and then to distribute the profits made in the course of the business to the beneficiaries.

In the case study, for example, Edward could vest his saved capital ($20,000) and the equipment he uses in his plumbing business (including the truck) in the trust fund. He would then cease to own those assets. If he appoints himself as the trustee, he would become the legal owner of those same assets, but now as trustee. The instrument of trust should authorise him, as trustee, to carry on the plumbing business.