Active Directory Administration Cookbook
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Trust transitivity

The same analogy also works for transitivity. Suppose that you want to lend your car to a friend, but they also want to lend the car to their friends. If you trust the friend enough, you will probably allow them to do so. If you don't have this level of trust in your friend, or you know some of their friends and you don't trust them with your car, then it's a bad idea.

In terms of Active Directory trusts, the trust type where you trust all the user accounts in all the domains to access the resource, is a transitive trust; parent-child trusts, tree-root trusts, and forest trusts are transitive, by default.

The trust type where you only trust your friend and not all of their friends to access the resource is a non-transitive trust. Realm trusts and external trusts are non-transitive, by default.