Trust Information

Introduction to Trusts

A trust is an obligation binding in a person (which can be an individual or a company) called a 'trustee' to deal with 'property' in a particular way, for the benefit of one or more 'beneficiaries'.

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What is a 'trustee'?

Trustees are the legal owners of the trust property. They are legally bound to look after the property of the trust in a particular way and for a particular purpose. Trustees administer the trust and in certain circumstances make decisions about how the property in trust is to be used.

What is property?

The property of a trust can include:

1. Money
2. Investments
3. Land or buildings
4. Other assets, such as paintings

The cash and investments held in the trust are also called the 'capital' or 'fund' of the trust. This capital (or fund) may produce income, such as interest or dividends. The land and buildings may produce rental income.

What is a 'beneficiary'?

A beneficiary is anyone who benefits from the property held in the trust. There can be one or more beneficiaries, such as a whole family or a class of people, and each may benefit from the trust in a different way.

For example, a beneficiary may benefit from

1. the income only, or
2. the capital only, or
3. both the income and the capital of the trust

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What is a 'settlor'?

A settlor is a person who has put property into trust. Property is normally put into the trust when it is created, but it can also be added at a later date.

Is a settlement the same as a trust?

The terms 'settlement' and 'trust' are often used interchangeably, but they are not strictly the same. A 'settlement' is a broader legal term that can include a variety of arrangements, including traditional trusts and other property arrangements. For tax purposes, 'settlement' has an even wider meaning and may encompass additional types of agreements, such as family arrangements or certain life policies, which may not involve a formal trust.