Setting up a Trust means you can either transfer assets to it or can get the Trust to buy assets that you would otherwise have owned yourself.
A Trust has a number of benefits in terms protecting your assets if you start a new relationship, or help make it harder to challenge your estate after you’re gone. It can also offer reassurance if you make significant financial gifts to your children and help protect your assets from creditors if life takes a turn.
A Trust can be set up by our legal team and managed by Edmonds Judd’s Trusts specialists at Redoubt Trust Management.
Technically a Trust is not a separate legal entity although it is treated as one. It is separate from the individual (or individuals) who sets it up and in particular it is a separate entity for tax purposes.
A Trust is a legal arrangement where one or more persons (the settlor or settlors) transfer property to another person or persons (the Trustee or Trustees) to deal with for the benefit of others (the beneficiaries).
It is usually intended to take effect during the lifetime of the settlor, and so can also be called an “inter vivos” (amongst the living) Trust.
Setting up a Trust generally means you will either transfer assets to it or will get the Trust to buy assets that you would otherwise have owned yourself. Some people find a problem in the idea of not owning things themselves but this overlooks the whole point of formation of a Trust.
The Settlor – the person who sets up the Trust. The settlor usually makes a nominal gift (say $10 or $100) to start things off.
The Trustees – the property is held by the Trustees (who can include the settlor and can also be beneficiaries). The Trustees can be anyone you like but there should be at least 1 independent Trustee. Usually, Trustees decisions must be unanimous.
The Beneficiaries – there must be at least one beneficiary. This is the person or persons that are able to receive and use Trust property or income from the Trustees.
Take note – Under tax law, people who give things to Trusts can become “deemed settlors” even if not named as settlor in the Trust deed. Also, by virtue of recent amendments of the Income Tax Act, beneficiaries whose current account with the Trust builds up can also become “deemed settlors” in certain circumstances.
To understand more about the duties of a Trust and the details required for administering a Trust, read our guide or talk to one of our experts today.