Key words within trusts
Trust
A trust is a legal obligation accepted by the trustees to hold property for the benefit of beneficiaries of the trust.
The trust property is commonly gifted or sold by the 'settlor'.
Settlor
The person(s) who sets up the trust. Normally this is the person(s) intending to sell or gift assets to the trust but sometimes it is another person (such as a lawyer) who is merely setting up the mechanism of a trust to be used by someone else (such as the client).
Trustees
The people appointed to hold legal ownership of the trust's assets under an obligation to manage these in a way that will benefit the beneficiaries.
Their prime duty is to carry out the terms of the trust deed and preserve trust property.
Beneficiaries
Individual(s) or group(s) for whose benefit the trust was established. Beneficiaries have a legal right to seek disbursements from the trust.
It is at the Trusts discretion to make distributions (for example, regular payments) to discretionary beneficiaries. It is a legal obligation to distribute Trust contents to the final beneficiaries when it is wound up.
Trust deed
This is the document that establishes the trust. It will be signed by the settlor and the trustee(s) and outline who the trustees and beneficiaries are.
The deed usually states the purpose of the trust which may include how the property should be invested, when distributions can be made, as well as what powers are given to the Trustees.
