Trusts

What is a trust?
Trusts have been used by families for centuries.  An express trust usually involves the formal transfer of assets (it might be property, shares or just cash) to a small group of people (usually two or three) or to a trust company with instructions that they hold the assets for the benefit of the others.  If the trust is to be made in your lifetime, to take immediate effect, then it is usually evidenced by a trust deed and often referred to as a “settlement”.  If it is to be created on, or shortly after, your death then the trust rules are likely to be set out in your Will.  This is known as a “Will Trust”.

Whether established by lifetime settlement or by Will, the trust document states who are responsible for looking after the gifted assets (the trustees), who are to benefit (the beneficiaries) and any rules or conditions which the trustees and the beneficiaries must adhere to.  The separation of the legal ownership and beneficial ownership of the assets in the trust is the unique characteristic of the trust concept.  The trustees are the legal owners but the beneficial owners are the beneficiaries.

A trust might last for just a few years, perhaps during a person’s widowhood or until a child attains a certain age or marries.  However, trusts can last for much longer – up to 80 years is the maximum fixed period currently permitted – or forever if it is a charity.  It is usually advisable to give the trustees the power to terminate the trust at their discretion.