Settlor Reserved Powers

Introduction

It is inherent to the creation of a trust that ownership of assets passes from the existing owner (settlor) to the trustee. Historically transfer of ownership also meant more or less complete transfer of control of the trust assets to the trustee.

How to ensure proper management of trust assets no longer under their ownership or control was not an uncommon dilemma for individuals considering the establishment a trust structure to hold their wealth. Especially if the nature of the assets, for example a family business, meant that hands-on day-to-day asset administration would sit better with the existing management than with the trustees.

This can be particularly important for settlors who are successful entrepreneurs and/ or who wish to protect their "crown jewel" assets. Such individuals often realise that their vision of strategic business and wealth creation does not sit easily with trustees' wide discretionary powers who are bound by duties of