Who are the parties to a trust?
There are 3 main roles involved in the creation of a trust. Here we explain who they are and what responsibilities they have.
Settlor: The Settlor is the creator of the trust and provider of the funds for investment. A Settlor can also be a beneficiary of his or her own trust although this depends on the type of trust chosen as it is sometimes not permitted.
Trustee: Trustees are the people the Settlor appoints and entrusts their assets to. The Trustees (when accepting the role), should fully appreciate and understand the terms contained within the trust deed and the legal principles which govern the trust. A Trustee must be at least 18 years old. They must be of sound mind and not bankrupt. A company can also be a trustee.
Beneficiary: The Beneficiaries are the beneficial owners of the property held within the trust. The beneficiary is appointed by the Settlor but can also be chosen at the discretion of the trustees depending on what type of trust and class of beneficiary is available. There are generally two types of beneficiaries. Discretionary Beneficiaries (these can be flexible) and Absolute Beneficiaries (these are fixed and cannot be changed).
Beneficiaries may also act as trustees although care should be taken to avoid any potential conflicts of interest.