Who are the main parties involved in a trust?
A trust is a legal arrangement where you (the settlor) transfer assets to individuals or a company (the trustees) to manage and hold for the benefit of others (the beneficiaries). Trusts are versatile tools used for estate planning, asset protection and tax efficiency. In this article, we outline the main parties involved in a trust.
Main parties involved in a trust
There are typically three main parties involved in a trust; these are:
- Settlor (or Grantor/Donor/Trustor) – the settlor is the individual who creates the trust and transfers assets into it.
- Trustee – the trustee(s) is the individual or group appointed by the settlor to manage and administer the assets within the trust. Trustees have a legal duty to act in the best interests of the beneficiaries, following the terms of the trust deed or will.
- Beneficiary – this is the person or entity who benefits from the trust’s assets, according to the terms set out by the settlor. There can be one or multiple beneficiaries, such as a family or a charitable organisation.
Other parties
In some trusts, particularly those involving minors or individuals unable to manage their affairs, a guardian might also be involved. A guardian is legally appointed to care for the beneficiary, usually a child, and make decisions about their welfare and upbringing. While the guardian focuses on the beneficiary’s day-to-day care, the trustee manages the financial aspects of the trust for the beneficiary’s benefit.
Furthermore, in some trusts, particularly offshore trusts, there may also be a protector. The protector is a person who holds powers under a trust but is not a trustee, often serving to oversee or control the administration of the trust by the trustees.