A trust is a legal arrangement in which one party (the settlor) transfers ownership of assets to another party (the trustee) to hold and manage those assets for the benefit of a third party (the beneficiary). Trusts are commonly used in estate planning, asset protection, tax planning, and charitable giving, and they offer a way to manage and control assets both during the settlor’s lifetime and after their death.
Key Components of a Trust
Settlor:
- The person who creates the trust and transfers their assets into it.
- The settlor defines the terms of the trust, including how the assets should be managed and who will benefit from them.
Trustee:
- The person or entity (such as a bank or law firm) responsible for managing and administering the trust’s assets according to the terms set out by the settlor.
- The trustee has a legal obligation (called a fiduciary duty) to act in the best interests of the beneficiaries, follow the trust document, and comply with relevant laws.
Beneficiary:
- The person(s) or organization(s) who will benefit from the trust. The beneficiary can receive income, capital, or both from the trust, depending on the terms of the trust.
- Beneficiaries can be individuals, charities, or other legal entities.
Trust Property (Trust Assets):
- The assets that are placed into the trust. These could include cash, real estate, investments, businesses, or personal property.
Trust Deed or Agreement:
- The legal document that sets out the terms and conditions of the trust, such as how the assets are to be managed, how and when the beneficiaries will receive distributions, and the powers and responsibilities of the trustee.
Call Linley James Solicitors to discuss making your Trust on 0207 060 1210