Introduction To Trusts

This note provides an introduction to discretionary trusts, and an overview of the control mechanisms that can be incorporated into a trust arrangement - including the appointment of protectors and the use of letters of wishes.

What follows is intended as a general introduction only, and should not be relied upon without more specific advice. It is not intended to address tax questions arising from the use of a trust.

The Trust Relationship

A trust (or "settlement" - they mean virtually the same thing) is a legal relationship created when a person (the settlor) places assets under the legal ownership of a trustee for the benefit of one or more beneficiaries. The division between ownership and control of assets and the ability to benefit from those assets lies at the heart of the trust relationship.