What is a Trust
What is a Trust
A Trust is a legally binding arrangement which requires three essential elements: a Trustee, Trust property and beneficiaries. A Trustee owns and manages the Trust’s assets. They do this ‘for the benefit of selected persons’ called beneficiaries. The person who establishes the Trust is called the Settlor.
The ‘Trust Deed’ holds all these relationships together and serves as the operating manual for the Trustees. Trusts can be an invaluable structure to separate and protect your assets and to preserve your wealth for future generations or causes that are dear to you.
Trusts can:
- Protect your assets;
- Protect your personal lifestyle from the risks associated with a business;
- Provide for your dependents such as children and grandchildren (e.g. for their education, or if they have physical or other disabilities);
- Ensure continuity of family ownership;
- Protect assets you bring into a marriage or relationship;
- Provide long-term support for charity;
- Protect and grow your investment assets and enable these to be passed on to your loved ones; and,
- Limit claims being made against assets after death.
To be effective, a Trust must be managed well. While the duties of Trustees can be onerous, they don’t have to be complex. They do, however, come in many shapes and sizes, and it is important to get professional advice.
