Wills, Probate, and Trusts

Introduction to What are Trusts

Trust

Trust is a relationship in which person A sets up or declares a trust and transfers property to Person B for the benefit of person C.

Important Terms

Person A is referred to as Settlor (who sets up or declare a Trust)

Person B is referred to as Trustee (he/she holds the trust property)

Person C is referred to as Beneficiary (for whose benefit the trust is declared/established)

Property

By property we mean

Real Property (land, buildings, and houses, etc)

Personal Property (cars, jewelry, paintings, CDs, and boats, etc).

Any property can be transferred to a trust such as Land, building, leasehold property, goods, cars, jewelry, Paintings, shares, Bonds, boats, Yachts, Patents, Trademarks, insurance policy, bill of exchange, etc.

Example

Simon declared a trust for the benefit of his son Mike and daughter Elisa, made his best friend Adam a trustee. Simon transferred his house, car, saving and Shares into the trust 

Simon is a settlor,
Adam is a trustee and
Mike and Elisa are beneficiaries.

Legal Title

The legal title of the property transfers to trustees upon the declaration of trust.

Examples

Simon declares a trust for the benefit of his son Mike and daughter Elisa. He appoints his best friend Adam a trustee. Simon then transferred his house, car, savings, and Shares into trust.

Adam is the trustee and he now legally owns the house, car, savings, and shares. But he cannot keep or use them as they are for the benefit of Mike and Elisa

Important

A settlor can also be a trustee of a trust

Example

Simon declares a trust for the benefit of his son Mike and daughter Elisa. He also appoints his self a trustee as well. Simon then transfers his house, car, saving, and Shares into the trust. It is a valid trust 

Simon is a settlor,

Simon is also a trustee as well

Mike and Elisa are beneficiaries.

Purpose of Trusts

  • To pass on assets when someone is alive or upon the death of their family or friends etc
  • To provide for children or minors who cannot hold property in their name till they reach the age of 18 or where the beneficiary is not of sound mind and they are incapacitated
  • To make sure that assets passed on are properly used for the intended purpose
  • To Protect the beneficiaries from creditors
  • To hide the identity of the real owner of the property
  • To reduce tax liability
  • To provide for a charitable purpose
  • Trust of lands to safeguard the interest of couples both married and unmarried
  • Trusts are commonly employed in all sorts of business situations

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Disclaimer​

While every effort has been made to ensure the accuracy of the information provided in this article, it does not constitute legal advice and cannot be relied upon as such. Each legal case and issue may have unique facts and circumstances, as a result legallex does not accept any responsibility for liabilities arising as a result of reliance upon the information provided. For further help and guidance, you can always rely on and seek advice from our experienced lawyers.

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