What is a Trust?
A trust is a way of managing assets (money, investments, land or buildings) for people. There are many different types of trusts available depending on what they need to achieve.
- the ‘settlor’ - the person who puts assets into a trust
- the ‘trustee’ - the person who manages the trust
- the ‘beneficiary’ - the person who benefits from the trust
What trusts are for
Trusts are set up for a number of reasons, including:
- to control and protect family assets
- when someone’s too young to handle their affairs
- when someone can’t handle their affairs because they’re incapacitated
- to pass on assets while you’re still alive
- to pass on assets when you die
What the settlor does
The settlor decides how the assets in a trust should be used - this is usually set out in a document called the ‘trust deed’. Sometimes the settlor can also benefit from the assets in a trust - this is called a ‘settlor-interested’ trust.
What trustees do
The trustees are the legal owners of the assets held in a trust. Their role is to:
- deal with the assets according the settlor’s wishes, as set out in the trust deed or their will
- manage the trust on a day-to-day basis and pay any tax due
- decide how to invest or use the trust’s assets
If the trustees change, the trust can still continue, but there always has to be at least 1 trustee.
There might be more than 1 beneficiary, like a whole family or defined group of people. They may benefit from:
- the income of a trust only - eg from renting out a house held in a trust
- the capital only - eg getting shares held in a trust when they reach a certain age
- both the income and capital of the trust
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