- A trust is a legal arrangement under which a trustee, or trustees, hold assets for the benefit of other people. It is a separate legal entity or body and will be given a name.
DOES A TRUST HAVE TO BE IN WRITING?
In its simplest form – no. But for the purposes of the type of family trust discussed here, yes it certainly does. A simple form of trust would be for instance the bank account in the name of a parent but held for the benefit of a child.
WHAT FORMS A TRUST?
There are several essential parts –
- The Settlor – that is the person who sets up the Trust.
- The Trustees – these are the persons who are to hold the property on the terms of the Trust.
- The Beneficiaries – these will be the persons for whom the Trust is set up and who are to receive the benefits under the Trust.
There must also be some Assets in the Trust. These assets may be in the form of:
- Cash (there is no minimum sum and a Trust can be established with an initial nominal sum of say $10.00)
- Land and buildings
- Stocks and shares, etc
- Obligations and Powers of the Trustees.
The Trust Deed will normally contain details of the powers which the trustees may exercise. These powers will include directions about such things as –
- The way trustees are to invest funds
- The ages at which beneficiaries may receive benefits
- The way in which new trustees are appointed
Specific directions about any particular asset