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Trusts Guide - Commonly Used Terms
Monday June 25, 2018

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Some of the commonly used terms are: -

 

Settlor

The Settlor is the person or persons who set up the Trust, so typically, is the person who owns the property or assets, which will be transferred to the Trust.  The Settlor appoints the trustees, gives those trustees certain powers and decides who will be the beneficiaries, all recorded in the trust deed.

From an income tax perspective, any person who settles property or assets on a trust is deemed to be a Settlor.  However legally, the person named as Settlor in the Trust Deed is the Settlor for the purposes of this guide.

Trustees

The Trustees are the people to whom the Settlor’s property or assets are transferred.  They have legal ownership of such property or assets, but they can only deal with them in accordance with the powers given to them by the Settlor and they must always act in the best interests of the beneficiaries.

You can have a number of Trustees and this can be decided in consultation with us depending on the particular circumstances.  From a practical point of view it may be inconvenient geographically and foreign resident trustees may create tax residency issues, in regard to who is appointed as trustees.  The Settlor can be and often is a Trustee also, particularly as most people want to retain a degree of control over the administration of the Trust themselves.  We also recommend the appointment of an independent Trustee.

Beneficiaries

The beneficiaries are the people who can receive a benefit from the Trust property.  To enable maximum flexibility most Trusts provide for “discretionary beneficiaries” who can only benefit from the Trust at the Trustees’ discretion.




 
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