A trust is referred to as a formal transfer of shares, property or money, in other words assets, either to a trust company or to a group of people with the directions that they possess these assets for other’s benefit. If the trust is initiated during the lifetime of an individual with immediate effect, then it is authenticated by the execution of a trust deed and is known as ‘settlement’. If the trust is created after the demise of the individual, then the rules of the same should be clearly stated in the will and it is referred to as a ‘Will Trust’. In that case, the terms of the trust should be created in consultation with trusts solicitors.
Be it the will or a lifetime settlement document, a trust document should also clearly mention the individuals who are in charge of taking care of the assets thus gifted. They are known as trustees and they are responsible for overseeing the fact that the beneficiaries are indeed benefited.
The distinction between beneficial ownership and legal ownership is a concept unique to trusts. This implies that the trustees are the legal owners of the trust while the people who derive the benefits are the beneficiaries.
Trusts have been formed over the years in order to address multiple problems. These include family matters and taxation issues. Individuals often take to the creation of a trust in order to transfer valuable assets, which are no longer needed. This not only reduces your wealth and lowers the amount of tax that you have to pay but also reduces the burden of inheritance tax from your lawful heirs. It is advisable to seek the advice of professional trusts lawyers while framing the clauses of the trust deed or settlement so that the roles of the trustees and beneficiaries are clearly stated and so is the possession of the assets.