WHAT IS A TRUST?

A trust is a legal obligation that comes into existence when an individual or other legal entity (known as the settlor) transfers the legal ownership of assets – which may be of almost any type – to another person or persons (known as the trustee) to hold for the benefit of identified beneficiaries who can be individuals or charity.

A trust involves the separation of legal and beneficial interests in property. In a trust situation the legal ownership vest in one or more persons or entities (the trustee(s) for the benefit of ('in trust for') another or others (the beneficiaries).

The trustee has a legal obligation to carry out the duties conferred upon him by the trust. The relationship between the trustee and the beneficiaries is a 'fiduciary' relationship, such that the trustee must always place the interests of the beneficiaries above his own.

Trusts can arise in a range of circumstances based on a formal trust document appointing the trustees and setting out the nature of the trust and its beneficiaries, the property subject to the trust, and the trustees' powers, responsibilities, and duty of confidentiality.  Trustees also have a duty to act in the best interest of the beneficiaries.

WHAT ASSETS CAN BE HELD IN A TRUST

• Term deposits and bank accounts

• Stocks and shares

• Insurance policies

• Property

• Mutual funds or unit trust investments

• Private company shares

• Retirement benefits