The Trust is a legal creation of English Law and dates back to the time of the Crusades when knights left their landed estates to fight in the Holy Land - being absent from their estates for many years and possibly not returning.
The development of the Law of Trusts has more than 500 years of case law precedent. All Common Law Jurisdictions (for instance the United States of America, the UK and Canada) and several Civil Jurisdictions (for instance Liechtenstein and Monaco) recognize the legal concept of a Trust.
A Trust can be briefly described as a relationship among the following three parties:
Settlor
The person or corporation who establishes the Trust.
Trustee
The person or corporation appointed by the Settlor to hold legal ownership of assets in the Trust for the benefit of the Beneficiaries.
Beneficiaries
Either the person(s), corporation(s), charities who have the beneficial right to enjoy the assets in the Trust when the Trustee determines to make a distribution in their favor as discretionary beneficiaries.
Or the person(s), corporations(s), charities who have the beneficial right to enjoy the assets in the Trust: the defined interest beneficiaries. For instance a Life Tenant who is entitled to receive for life all net income earned by the assets of the Trust.
A Trust, which is usually a written document executed under seal ("the Trust Deed") between the Settlor and the Trustee, creates a separation of Legal Ownership held by the Trustee, from Beneficial Ownership, the right to enjoy, held by the Beneficiaries.
This legal separation between legal and beneficial ownership enables considerable flexibility in succession planning, asset protection planning, tax and financial planning.
Trusts have been used for generations to protect and preserve some of the largest family fortunes.
The most common objectives for establishing a Trust include:
