trusts

The trust concept

Introduction | Origins | Deciding on a Trust | Civil Law | Other Jurisdictions

The basic description of a “trust” is that of a relationship or arrangement created when a person (the Settlor) transfers property to a third party (the Trustee) for the benefit of another person (the beneficiary).

The classic common law or English trust involves the following characteristics:

1. The trust property is owned by the Trustee who alone can sue and be sued.
2. The trust property is not part of the Trustee’s private patrimony. The property must be maintained as a separate fund so as to avoid exposure to claims from the Trustee’s creditors, heirs, or spouse.
3. The Trustee holds an office that is subject to fiduciary obligations which are owed to the beneficiaries (and not the Settlor), and in the case of charitable purpose trusts, to the Attorney-General of the Charity Commision.
4. The beneficiaries - or the Attorney-General or Charity Commission - have;
   • the right to seek compensation or injunctions against the Trustee or third parties who dishonestly assist the Trustee in breach of trust or who dishonestly deal with trust property received by them;
   • equitable proprietary rights in the original trust property and accruals thereto;
   • the right to bind the Trustee and third parties unless they are bona fide purchasers of the legal title without notice of the equitable rights of the beneficiaries;
   • the right to direct the Trustee to transfer the legal title to them or their nominees if they are of full capacity and between them absolutely beneficially entitled to the trust property.

Please contact us and we will be more than pleased to assist you with any questions you may have on establishing a trust.

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