Trusts - The Basics
What is the Problem?
This week's question has been raised by many people including Theresa from Southampton. Theresa asks:
"What is a trust, how does it work and what are the benefits of creating a trust?"
What To Do
The word "trust" usually prompts people to think about their close friends and family - those that they actually trust. The feeling of trust is at the heart of the trust relationship, because ultimately you are trusting someone to perform contractual duties for the benefit of another party: called a beneficiary.
A record of the items being placed into trust and the duties and responsibilities of those associated with the trust, can be found in a document called the Trust Indenture. This document contains the law of the Trust
The Outline Solution
In a very simple trust relationship there are 3 parties.
Parties to the Trust:
The Grantor/Settlor: is the party "granting" the trust into existence, or settling (putting) something into trust for the benefit of the Beneficiary(s).
The Beneficiary: The party who benefits. For example: if a rental property were placed into trust, you would expect the Beneficiary to benefit from the rental income.
The Trustee: The party managing the property for the benefit of the Beneficiary. To continue our previous example; the Trustee would manage the rental property for the benefit of the Beneficiary, handling all legal matters associated with the property.
Need More Help?
You can learn more about trusts and their uses by joining the Insiders to access videos 2, 3 & 4.
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