What is a Trust ?

A trust is an agreement made between two parties, who are called the Settlor and the Trustee.  Through this agreement, the person called the Settlor transfers the legal ownership of assets he holds, to the Trustee, for the benefit of a third party.  This third party is called the Beneficiary.

A Trust may exist in a variety of circumstances.  The Trust can be created during the lifetime of the Settlor or by will.  In the latter case the Trust will come into effect upon the Settlor’s death.

Through the private agreement which is called the Trust Deed the Settlor grants powers to the Trustee or Trustees regarding the administration, management and disposition of the Trust Property.

In a Fixed Trust the Settlor gives the Trustees specific instructions as to how to administer and distribute the Trust Assets.  In a Discretionary Trust the Settlor may give the Trustees discretion as to how to manage, administer and dispose of the Trust Assets.  In this case the Settlor may give the Trustees some guidance through a Letter of Wishes.

One need not worry that the Trustee will appropriate himself personally of the assets entrusted to him by the Settlor.  The Trust Assets will be kept separate from any other property owned by the Trustee.