Trust FAQs

A trust is a binding document which defines how property is to be managed on behalf of the beneficiaries. The entity charged with the property is the Trustee, while any property placed in the Trust becomes the Trust Property.

There are three (3) persons involved:

1. The Creator/Settlor of the Trust – The person setting up the Trust.
2. The Trustee – A person or company charged with managing  the Trust for the beneficiary.
3. The Beneficiary – The person(s) benefiting from the Trust.

Anyone able to acquire and/or dispose of property can create a Trust, with the exception of minors and mentally ill persons.

A Living Trust is one that can go into effect while the settlor is still alive.  Trusts created to take effect after the settlor has died are referred to as Testamentary Trusts,  and are established under the last will and testament of the settlor.

Any type of asset can be transferred to a Trust. This includes cash, securities, real properties, shareholdings in a trading or investment holding company or any asset(s) located anywhere in the world.

While there are a variety of Trusts that may be created, Trusts can be divided into two main categories: Charitable and Private Trusts.  

Charitable Trusts are created for philanthropic purposes such as alleviating poverty, providing for education, religious purposes, etc.   

Private Trusts on the other hand are created for beneficiaries with no purposes connected to public welfare, or any type of public or charitable cause. 

There is scope for a wide variety of Trusts within these main categories, therefore Trust creators must have some idea of the type of Trust that would meet their requirements.

Since a Trust is binding, there are several important factors involved in establishing one. However, these questions build the foundation of any Trust:

1. Who will be the beneficiary?
2. Who will be the trustee/trustees?
3. When and how will the assets be disbursed to the beneficiaries?
4. How long will the Trust last?
5. Who will receive the balance of the assets at the termination of the Trust?

Unless the terms specify otherwise, a Trust may continue in existence for an unlimited period.

Trusts are confidential, tax-efficient and highly flexible financial planning instruments to provide for specified beneficiaries, during and after your lifetime. 

The major advantages of creating a Trust are:

• Privacy
  Assets held are invested in the trustee’s name, protecting the identity and interests of the beneficiaries for confidentiality that endures until the termination of the Trust.
• Tax planning
  A trust may be used to reduce tax liabilities, since assets owned by a trust will not be included in the estate of a deceased person. This allows the estate or inheritance tax to be minimized or even eliminated.
• Asset protection
  As far as the law permits, a trust may protect assets from any claims by future creditors.
• Succession planning
  Trusts are effective tools for succession planning, allowing you to make provisions for family members, relatives, friends, charities and other organizations.  Where domestic inheritance rules may otherwise be imposed, Trusts allow for flexibility. They also facilitate efficient distribution of trust assets to beneficiaries without the lengthy and complicated procedures of probate. 
• Asset consolidation and management
  Trusts are a convenient means of placing your worldwide assets in one location, thereby simplifying both asset management and centralized financial reporting.
• Continuity
  A corporate trust provides continuity, in that a corporate entity cannot die, get sick, migrate, become incapacitated, etc. 
• Experience
  A corporate trust provides years of experience in the investment and management of assets.