Legal Definitions - trust indorsement

Definition: Trust indorsement is a type of indorsement where the payee becomes a trustee for a third person. It limits the instrument to the use of the indorser or another person.

Example: "Pay Erin Ray in trust for Kaitlin Ray."

This means that the payee, Erin Ray, is holding the money as a trustee for Kaitlin Ray. The money cannot be used for any other purpose than what Kaitlin Ray intended it for.

Trust indorsement is a type of restrictive indorsement that limits the use of the instrument to a specific person or purpose. It is often used in situations where the payee is not the intended recipient of the funds, but is holding the funds on behalf of someone else.