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:
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:
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: