There are many benefits to creating a Trust; these include taxation planning (wealth taxes, inheritance taxes, etc.) - Estate planning and protection for or from the family - Protection of minors and Asset Protection, from political and social instability.
A Trust exists when one person, the Trustee, holds property for the benefit of another person(s), the beneficiary. The Settlor (creator of the Trust) transfers his property to the Trustee. It is important to appreciate that the legal title then passes to the Trustee and the link with the Settlor is broken.
As far as the day to day running of the Trust is concerned, more importantly in the event of the death of the Settlor, he will set out his guidelines and thoughts to the Trustee in a Letter of Wishes, which is not a binding document.
The beneficiaries have the right to enforce the Trustees obligations and duties as set out in the Deed and enacted in statute law and common law. It is important to appreciate that if noone has enforceable rights, there is no Trust. This gives the Settlor and beneficiaries a degree of comfort, because if the Trustees act improperly, the beneficiaries can compel the Trustees to comply with the Trust Deed and if necessary bring about the assistance of the Court.
The Trustee only has legal title; he cant enjoy the Trust assets. The beneficiaries can only enjoy the assets and cant have title it is a feature of Anglo Saxon common law and the law of equity. Interestingly in parts of Europe where the legal system is based on Civil Law, the Trust concept is not really recognized.
A Trust can be created during the Settlors lifetime or on his demise. It can be an oral declaration or by the execution of a Trust Deed which covers the following areas:
There are stringent statutory law and common law duties to protect and enhance the Trust for the beneficiaries. For more information on this and other tax laws, contact Graydon & Associates