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Trust: Difference between revisions
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Trusts are created as follows: | Trusts are created as follows: | ||
{{quote| | {{quote| | ||
Day 1: There is this dude who owns a thing. The dude we will call a | Day 1: There is this dude who owns a thing. The dude we will call a “[[settlor]]”, and the thing we will call an “[[asset]]”. <br> | ||
Day 2: Without legally ''giving'' them the asset outright, settlor dude wants to give the ''value'' of the asset to another dude, or dudes, or generalised ''class'' of dudes — whom we will call the | Day 2: Without legally ''giving'' them the asset outright, settlor dude wants to give the ''value'' of the asset to another dude, or dudes, or generalised ''class'' of dudes — whom we will call the “[[Beneficiary|beneficiaries]]” — . This non-legal-ownership-but-all-other-value we call the “benefit” or “[[beneficial ownership]]” of the asset.<br> | ||
Day 3: The settlor dude appoints a third dude | Day 3: The settlor dude appoints a third dude as a “[[trustee]]” and legally transfers the asset to the trustee on express terms that she must hold the asset “on [[trust]]” for the [[beneficiaries]] according to the terms of the contract creating the trust (usually a [[trust deed]]). | ||
}} | }} | ||
Things to note: The settlor and the trustee can be the same person. The settlor and the trustee can also be beneficiaries, though the trustee cannot be the ''only'' beneficiary, because then the separation of legal and beneficial ownership fails.The trust has no separate legal personality, so a person who owns all the legal title and all the beneficial interest in an asset is not a trustee anymore: they are jsut the outright owner. | |||