02: Who is involved in a trust?

The main people involved in a trust are the settlor, the trustees and the beneficiaries.

The settlor is typically the person who sets up the trust, but in fact it can mean anyone who contributes property to the trust at any time. In Scotland the settlor is called the ‘truster’ or ‘granter’. Trusts can be set up in several different ways and for a variety of purposes – ranging from property ownership to running a pension scheme and looking after the assets of a disabled person.

The creation of most trusts normally involves drawing up a trust deed which sets out what property the trust will hold, who will be the trustees, who will benefit under the trust, the powers of the trustees and the rights of the beneficiaries.

The trustees look after the trust property in accordance with the trust deed and hold the property in their name for the benefit of the beneficiaries. Trustees have a duty of care and must act in a way that an ordinary prudent business person could be expected to act. The trust deed may give the trustees wide powers to distribute the income and assets of the trust, or it may have very precise rules and leave the trustees little or no discretion. The trustees are generally responsible for the trust’s accounts and tax affairs.

The beneficiaries are the people for whom the property is held under the trust. A beneficiary may be entitled to all the assets, or just some of them, or just an aspect of them, e.g. the income from the property in the trust or possibly the capital at some point in the future. In particular, their entitlement may be set and clear or the trustees may have some discretion about what if anything particular beneficiaries might receive from the trust.