FAQs about Elderly Client Services
What does the term trust mean ?
A trust distinguishes between legal and beneficial ownership of property or any other asset. The legal ownership means who is responsible for managing the property and beneficial ownership means who may derive the benefit of the trust.
How is a trust created ?
A settlor is the person that creates the trust. Once the trust has been created they will appoint a trustee to manage the asset(s) for the benefit of the beneficiaries.
Is there any other way a trust can be created ?
Normally the person with legal ownership of the trust is the creator of the trust.
The trustee has the ability to transfer, sell and divide the property. They are restricted in their actions by having fiduciary responsibility to the beneficiaries. This relationship requires the trustee to have an absolute duty of loyalty to the beneficiaries when managing or distributing the trust assets.
How can I be sure that the trust is managed properly if I am not acting as a trustee ?
The most effectively managed trusts are those with specific wording which guide the trustee in terms of what the settlor’s intentions were in creating the trust.
What rights do the beneficiaries have over the trust ?
The beneficiaries do not have any legal rights over the trust property.
The beneficiaries are however entitled to make court applications to force the trustee to make certain decisions in the event that they are mismanaging trust property.
How can trusts help reduce taxes ?
If a parent of adolescent children channel their income into a trust for the benefit of the children they can channel their income in this trust and avoid paying taxes. This money can then be used to pay for example, the children’s university fees.
I am not married to someone I’m living with but have made contributions to our place of residence. How can trusts law help?
Trust law has evolved to suit society’s needs. This is particularly the case in relation to unmarried couples living together.
The law is unable to resort to matrimonial law in these kinds of situations which means the courts must instead interpret a constructive trust to ensure property ownership is fairly determined.
How can I know if I can set up a trust or a trust can be interpreted in relation to my situation ?
The court are continually interpreting and developing new types of trusts. It is therefore advisable to consult your accountant or lawyer before setting up a trust to ensure your intentions will be valid and have the desired effect.