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In conversations about inheritance and estate planning, many people think only about writing a Will. But there is another powerful tool that is often overlooked: A TRUST!!
Unlike a will, which simply states who should inherit your property after your death, a trust allows you to control how and when those assets are used, sometimes even while you are still alive.
What is a Trust?
A trust is a legal arrangement where one person, known as the settlor, places assets such as money, land, or investments under the care of another person or institution, known as the trustee. The trustee is then responsible for managing those assets on behalf of a third party, the beneficiary.
Think of a trust as a protective container or a safety deposit box. The trustee holds the keys to the box, but the contents are for the beneficiary's use, not the trustee's. Everything is governed by a written document called a trust deed, which sets out the rules.
Key Elements of a Trust
- Settlor: The person who creates the trust and transfers assets into it.
- Trustee: The person or institution managing the assets responsibly.
- Beneficiary: The person(s) who benefit from the trust.
- Trust Property: The assets placed in the trust.
Types of Trusts
- Living Trusts: Created while the settlor is still alive, often used to manage assets and avoid lengthy probate processes.
- Testamentary Trusts: Established under a will, and only take effect after the settlor's death.
- Charitable Trusts: Created for causes such as education, healthcare, or social welfare.
Should a trust be registered or incorporated to be recognised by law?
Most trusts do not need to be registered or incorporated before they are valid. A trust comes to life once three key elements exist:
- a settlor with the intention to create the trust,
- identifiable trust property, and
- clearly named beneficiaries.
That's it! No fanfare, no Office of the Registrar of Companies (ORC) stamp, and no incorporation certificate.
However, registration becomes important depending on the type of property involved. For example:
- If the trust holds land, the interest in the land must be registered at the Lands Commission.
- If the trust operates like a charity, then registration under the relevant laws and statutory agencies such as the ORC, may be required.
Think of it like this, the trust itself doesn't need to be registered, but the assets inside may need to be.
Can a trustee misuse trust assets for personal gain? What remedies exist?
A trustee is supposed to be the "responsible adult" in
the trust relationship. The law places them under strict
duties—loyalty, honesty, and accountability. This is
known as Fiduciary duty.
So, in theory, a trustee should not and must not
misuse trust assets; in practice... well, humans will be
humans.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
