These arrangements allow the person making the gift (the settlor) to transfer ownership of their assets to another party (the trustees). The trustees hold the assets for either the sole benefit of a chosen person or group of people (the beneficiary) - without giving them access to the assets for the time being.
Who is involved in setting up a trust
There are normally three parties involved in setting up a trust:
- The settlor – this is the person who creates the trust. They will appoint trustees to administer the trust and decide who the beneficiaries of the assets will be.
- The trustees – these are the people the settlor chooses to hold and manage the assets, according to the terms of the trust, for the sole benefit of the beneficiaries.
- The beneficiary – this is who the settlor wants to benefit from the assets held under trust.
Everything that is done with the trust assets by the trustees must be in the best interests of the beneficiary.
How a Trust works
- The settlor - transfers ownership of his or her asset(s) to another party creating the trust
- The trustees - become legal owners of the asset(s) and administer it for the benefit of the settlor’s chosen beneficiaries
- The settlor - will be a trustee and should appoint additional trustees
- The beneficiary - may benefit from the asset(s) under the trust at a future date.
For further information on trusts, including some key questions and answers, please see our Trust Overview Guide.
Which trust to use