Trust – Definition and basic structure

Nowadays a trust can be described as a legal arrangement whereby the owner of certain assets (like real estate, art collection, portfolio of securities, cars, money) (so called settlor) transfers such assets to a legal or natural person (so called trustee) to keep and manage them for the benefit of another person or group of people (that is the beneficiaries).

A settlor transfers his or her assets to the trust fund. From this very moment the assets legally belong to the trustee, who in accordance with the trust documents manages them and distributes them from time to time to the beneficiaries. This is a basic structure. Depending on a given situation there might be also other actors involved, such as:

• Protectors – who are independent third persons or entities who monitor and ensure that the Trustee is acting in accordance with the terms of the Trust Deed and in the best interests of the Beneficiaries, OR
• Advisory bodies and committees – consisting of trusted friends, relatives, beneficiaries and/or qualified advisors who would take a role in advising the Trustee on various matters relating to the management, investment and distribution of the trust assets. Such committees may advise the Trustee on a regular basis on various matters which the Trustee may not be in a position to know (i.e. the current family status and needs of beneficiaries).

Note: The content of this article is relevant at the time of its first publication. It is intended to provide general information on the topic and does not constitute legal advice. We recommend seeking professional advice regarding your specific matter before taking action based on the information presented. For more information or consultation, please contact our tax experts by email at contact@mainpartnertrust.com