Trusts
3. What is a Trust?
Authors: Staff Legal Eagle
Firm / Chambers:
Last updated: 23 Sep 2015
- A trust is a legal relationship in which a person or organisation (the trustee) takes legal ownership of property or other assets (such as business assets) for the benefit of another person, persons or an organisation (the beneficiaries).
- Once the person establishing the trust (the settlor) transfers the property to the trustee (usually an individual or company) they no longer own the assets.
- The property held on trust is owned in law by the trustee and in equity by the beneficiaries. This means that even though the trustee’s name is on the certificate of title, receipt or other proof of ownership it is not theirs. The trustee is really only looking after the asset for the beneficiaries.
- If the trust is associated with a business then the trustee becomes legally responsible for the operations of the business and runs the business for the benefit of the nominated (named) beneficiaries.
- Trust income and other assets may be distributed among the beneficiaries in accordance with the terms of the trust.
- Family businesses are often set up as a trust to allow each member of the family to obtain a benefit from the business without them all having to be involved in the day to day running of the business.
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