What is a Trust?

Put in simple terms, a Trust allows the separation of the control and enjoyment of property.

The 'Settler' is the person who starts the Trust by putting property or money into it. The property can also include things such as investments or businesses.

The 'Trustee' controls the property for the benefit of another - the 'Beneficiary' but the beneficiary is the real owner in the sense that they enjoy the benefit of the property. There can be more than one trustee.

The Trustee has to act in the best interest of the Beneficiary at all times and is under legal obligation as to the investment and management of the trust.

The 'Beneficiary' benefits from the property of the trust. The beneficiary can be an individual or a class of people such as a charity, family or pension fund.

Why Create a Trust?

So why create a trust, why not just give the money away?
There are various reasons why someone might make a trust including the following:

• The beneficiary may be too young to look after a large sum of money.
• The beneficiary may be unable to manage their own affairs due physical or mental debilitation.
• The settler may be afraid that if the money was given directly to the beneficiary it would be 'frittered' away.
• Clubs, charities and pension funds would also use trusts.

Someone may also want to keep control of assets whilst transferring their benefits.  For example, where the owner of a family business wants his children to benefit from that business but wants to keep the decision-making and control to himself.

For more information on trusts please visit our contacts section and contact us via one of the methods there.