Trusts – Trust
A Trust is the legal process whereby an arrangement is made to make one or more persons legally responsible for some collection of assets. These assets can be anything that is considered to be of value such as cash, property, land or priceless heirlooms, and are placed in the Trust so that they can be used to the benefit whoever the beneficiaries of the trust happens to be.
The ‘trustee’ is the person who is responsible for the day to day management of the Trust and must carry out the wishes of whoever (‘the settlor’) has originally placed the assets within the Trust. The settler must formally set out what these wishes are in a legal document known as the trust deed.
A Trust may sound like quite a complicated legal procedure to end with a situation where basically someone looks after something for the benefit of someone else. But there are a number of good reasons why people may want to pick the Trust structure over other arrangements. Firstly, a Trust arrangement offers a lot more control over the assets in question, especially if he beneficiary is too young, or otherwise incapacitated, to adequately take care of their own affairs. Secondly, Trusts are a good way for the settler to legally pass on money to the beneficiary while they are still alive, meaning they will not have to go through the process of probate.
The types of ‘property’ or assets that can be placed into a Trust are often money, investments, land or buildings or things such as jewels and diamonds. Investments and cash that are held in the Trust are technically referred to as the Trust ‘fund.’ These assets may produce some extra income, such as rent form the buildings and interest from the money, and the assets may be sold if there is the desire to earn a little more capital; for the Trust.
The role of trustees is central to the whole idea and operation of Trusts. Trustees are considered to be the legal owners of the assets in the Trust. They are appointed to that role by the settlor to deal with assets as set out in the trust deed, pay any tax, manage the Trust and make any investment decisions regarding the assets that need to be made.
The beneficiary of the Trust can be absolutely anyone the settlor feels should reap the rewards that come with the assets. They can benefit in a number of ways from the Trust, either just taking the income that is made from the assets (rent, etc), taking the capital when they reach a certain age or they may decide to take it all if it suits them.
A breach of Trust is considered to be any action by the trustee which is not in line with the trust deed of the settlor.
Trusts are only one way for an individual to make sure that the people they want to benefit from the assets they have get them. It is the best way of ensuring that someone you trust is managing the assets on a day to day basis.