A trust is a fiduciary relationship in which one party, known as a settlor, gives another party, the trustee, the legal right to hold title to property or assets for the benefit of a third party, the beneficiary.
What is a trust?
Who is the owner of the trust?
To create a trust, the property owner (the "settlor") transfers legal ownership to a person or institution (the "trustee") to manage that property for the benefit of another person (the "beneficiary").
How do I create a valid trust?
In order to create a valid trust the settlor needs to be over 18 and of sound mind. The trust document setting out the trust needs to show that there is certainty as to the intention of the settlor to create the trust, details of the specific assets to be transferred together with details of the beneficiaries.
Who is the settlor?
The person that intends to establish a trust is the settlor.
Is a Protector required?
It depends on the Settlor whether one is appointed.
How long does a private trust last?
Usually not more than 125 years.
What are the uses of trusts?
You can use a trust to protect, enhance and pass on assets for current and future generations. And with careful planning and advice, a trust can perform a range of valuable functions, including for example:
- Preserving wealth -
A trust ensures accumulated wealth is centralised and controlled by a trustee responsible for holding and preserving the assets. This prevents family wealth being divided up among heirs so that it can continue to grow for the benefit of future generations.
- Creating a legacy -
You can use a trust to pass on your legacy to future generations so your name and achievements can continue, benefiting others.
- Estate planning -
Trusts, like wills, can be an effective way to plan how someone’s assets are managed or distributed after death. They can be used for example to avoid ‘forced heirship’ issues.
- Tax planning -
When you legally transfer your assets to a trustee, they are no longer considered to be part of your estate. So, with appropriate planning and advice, the use of a trust may reduce your tax liabilities.
- Philanthropy -
Trusts can be set up for charitable purposes, and their structure depends on the jurisdiction where they are established. You can appoint specific beneficiaries, or choose a more general class of charitable beneficiaries.
Can a Settlor be a trustee?
Can a trustee be a beneficiary?
Can I be a sole trustee?
Yes unless the trust holds land.
How many trustees should there be?
One at least, if it is a corporate trustee. Otherwise, a minimum of two individuals but not more than four.