There are many reasons for creating a trust and may be called a family trust, property trust, investment trust, charitable trust, estate trust etc.

More complex trusts, or trusts where those that set it up are not involved, may have additional or alternative requirements.

These notes are not a comprehensive guide to trust management and may not cover all the aspects or requirements of your trust, particularly if your trust is more complex. In all cases you must obtain professional advice for your own circumstances.

Sham Trusts

A sham trust is one which has been set up and then operated poorly. The trust activities are often so mixed with your own that they can't be separated.

Sham trusts might be ignored, negating the benefits of having a trust.

Good trust administration is a key to showing your trust is not a sham.

Roles

There are normally three formal roles involved with a trust, settlors, trustees and beneficiaries.

Understanding that each role is different is important when administering your trust.

Settlors are those who set up the trust. They may also retain some powers, e.g. to hire and fire trustees or add beneficiaries. If you set up the trust you are probably a settlor. However you don't get to decide what happens with the trust day to day.

Trustees legally own the trust assets and have the trust liabilities. Trustees operate the trust for the beneficiaries as a group. You are likely to be a trustee.

Beneficiaries are those that benefit from the trust. Typically you, spouses, children and grandchildren will be beneficiaries. Sometimes there will be other beneficiaries, e.g. spouses of children, charities or your wider family.

Trusts will normally say that beneficiaries only have a right to be considered, not an entitlement to trust assets.