Trust Deed
This is a complex legal document which, among other things, contains comprehensive instructions on what the Trust and its controlling Trustees can and cannot do, according to the wishes of the Settlor and the laws of the jurisdiction where the Trust is written.
The document includes the following:
1. The lifespan of the Trust, usually 99 years;
2. Details of the law under which the document is drawn up;
3. Identification of the beneficiaries;
4. Definition of the circumstances under which the income and capital of the Trust fund are to be disbursed to beneficiaries;
5. The Trustee’s duties and powers;
6. Acknowledgment of transfer of Trust property from the Settlor to the Trustee;
7. Provision for the Trustee to accept further property as part of the Trust fund, and that the initial transfer need only be a nominal amount.
In general, this document should set out specific terms and conditions under which the Trust should be terminated, and what would happen to the assets should this happen.
Settlor
The individual/entity establishing the Trust and housing assets in the Trust.
Trust Assets
Assets which the Settlor places into the Trust periodically. Depending on the Trust type, Trust property needs not be specified in the initial Trust Deed, but can be added at a later date.
Trust assets are anything that can be legally transferred, including cash, securities, property, copyrights, land and companies. In our experience, cash (bank accounts), property and trading companies are the three most common assets to be placed in offshore Trusts.
Back to TopTrustee(s)
The individual, individuals or company designated by the Settlor to carry out the Settlor’s wishes according to the Trust Deed. The Trustee, which has complete control over Trust assets, is often a professional Trust agent in the jurisdiction where the Trust was established.
The Trustee's role is similar to that of a bank. Client accounts and deposits are managed in the same way that a bank would. In addition, wills, assets contained in wills to third-party beneficiaries, as well as testaments would be managed by the Trustee.
Trustees are normally excluded from benefitting from the Trust assets.
Beneficiary
A beneficiary is a recipient of payments from a Trust. The beneficiary may be named in the Trust Deed, though this usually depends on the type of Trust. If they are not named in the Trust Deed, they can be referred to the Trustee privately.
Protector
The Protector’s role is to ensure that a Trustee is administering the Trust properly, and as such has the authority to appoint and remove Trustees.
Certain Trust Deeds need advance approval from the Protector before the Trustees can exercise key powers, which may include the distribution of capital.
It is important to consider that a Trust can be rendered invalid if the Protector is viewed as an agent of the Settlor. Therefore, the Trust Deeds must clearly state the role and relationship of the Protector.
Letter of Wishes
This is a document drafted by the Settlor. Broadly, it is the Settlor’s wish list of actions he or she wants the Trustees to take under different scenarios. Often, a Letter of Wishes is drafted alongside the Trust Deeds.
The Letter can be given to the Trustee at any time from when the Trust is formed, and can be amended or replaced at any time to adjust to new circumstances.
Though the letter is not legally binding, it is a useful guide for the Trustee when, for instance, the Settlor has been out of contact with the Trustee for a long time.
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