What Is A Trust?
A trust is a legally binding way of securing and managing assets. This usually means transferring assets through a trust fund and can give the all the parties involved peace of mind that they are being managed exactly how the the original asset holder intended.
Assets:
Assets which may be transferred into a trust may include:
- money
- investments
- land
- property
- belongings such as cars or antiques
- whole companies or business rights
The Parties Involved:
The 'settlor' or donor: Trusts are usually set up by the settlor who places an initial asset into the trust. Because a trust is founded on a legal contract it gives responsibility to certain people to take care of the assets.
The trustees: These are usually a set of people chosen by the settlor which could include the settlor him/her self, family members or friends who manage the trust and are legally responsible for the assets. They must make sure they are working within all the conditions set out in the legal document of the trust known as the trust deeds.
The beneficiaries: The individuals or charities which will benefit from the assets or eventual outcome of the trust.
The Trust Deeds.
The trust deed, also known as the declaration of trust, is a legally binding document establishing a framework of rules and terms which the trustees must adhere to. It may describe:
- The purpose of the trust such as who the beneficiaries are.
- Who the trustees are and their roles including responsibilities and powers.
- The process if they are to be appointed or removed.
- The investment approaches of the assets.
- If the deed can be altered at any point.
- The outcome if the settlor is to pass away.
Different Types of Trusts
Trusts may either be set up during one's lifetime (inter vivos or living trust) or after someones death as requested in a will (will trust or testamentary trust).
Depending on which trust you set up, there are many different characteristics. Trusts can either be irrevocable, revocable or discretionary and these different characteristics can greatly affect the eventual outcome of the assets or trust.
There are many different types of trust and each holds various benefits depending on your circumstances. Deciding on the best trust for you may involve the help of an independent financial advisor:
ABOUT TRUST ONLINE