What is a trust?
A trust is brought into existence when a person (called the ‘settlor’) transfers some of his assets to trustees (who become the legal owners) for the benefit of third parties, called ‘beneficiaries’ (the beneficial owners). A trust is a legal entity in itself. Another word for a trust is a settlement. Sometimes trusts are created under a Will and sometimes they are created during the lifetime of the settlor. Sometimes trusts are created to save tax, sometimes to protect assets; there are many and various reasons for setting up a trust.
A trust is an obligation on the trustee to hold property or income for a particular purpose on behalf of another party. There are a number of different types of trusts. These may include: • Discretionary trusts; • Unit trusts (public and private); • A combination of a unit and discretionary trust (hybrid); • Fixed trusts; • Testamentary trusts; and • Inter vivos trusts The essential elements of a trust are: • A constituent document (the trust deed) although a trust can be created orally or implied; • Trust property; • Beneficiaries; • Trustee; • Settlor; and • Obligations in relation to the trust property as set out in the trust deed.
A trust is a legal construct used for holding, transferring or otherwise disposing or property. It consists of assets given to it by a Grantor (the person who creates the trust) which are managed and distributed by a Trustee to benefit one or more Beneficiaries (those persons or organizations who will receive property under the trust).
The term trust describes the holding of property by a trustee (which may be one or more persons or a corporate trust company or bank) in accordance with the provisions of a written trust instrument for the benefit of one or more persons called beneficiaries. A person may be both a trustee and a beneficiary of the same trust. A trust created by your will is called a testamentary trust and the trust provisions are contained in your will.
A trust is a contractual agreement of trust. The settlor places something of value, into the care of the trustees, for the benefit of the beneficiaries. This contractual agreement must be witnessed. If you don’t have trust, then you don’t have a trust. A trust is a lawful, ethical and effective way to protect your assets. Ownership of the property held in trust is divided into legal and equitable. The trustee has legal title to property held in trust that the trustee is under contract to safeguard or exploit for the benefit of the beneficiaries. The beneficiaries have the equitable or beneficial ownership of the property.
