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The Trust and some definitions

The trust is a legal entity whereby property is held by a person or persons on behalf of another person or persons.

A Trust is set up or ‘settled' by the ‘settlor' (who frequently plays no further part), and is looked after by the ‘Trustees' for the benefit of the ‘Beneficiaries' who are of various types:-

  • There are those given an ‘interest in possession' (during the life of the Trust) e.g. a right to the income.
  • Those who will ultimately receive benefits at the cessation of the Trust are sometimes known as remaindermen.
  • Others have no ‘right' to benefits but may be granted them fro time to time.  They are ‘potential' beneficiaries.

The Trust has a limited lifetime known as the perpetuity period.

Therefore:

The Settlor Sets up the Trust.
The Trustees Run the Trust and are told what powers of investment and distribution they have by the Trust document.
The Beneficiaries Are those people (some of whom may not even be born yet) who might receive the benefit of the Trust depending on the Trustees.

 

Any person may wear several hats in relation to a Trust e.g. they may be a Trustee and a Beneficiary.