Overview

There is in some people’s minds a great deal of mystique attached to trusts. In reality, however, when stripped down to its bare essentials, a trust is a straightforward concept. At its most basic, it is a means of putting money aside with some predetermined rules as to how it is spent – think of a child’s piggybank and you have the general idea.

Over the centuries, however, rules have grown up to complicate the meaning and usability of trusts in everyday life. This briefing by Macfarlanes aims to clarify the situation surrounding trusts.

In legal terms, a trust is different from a company type entity: it is not tangible; it has no free-standing existence (though it’s often a taxpayer). A trust is a legal relationship between (a) the person providing the assets which fill the piggybank, (b) those who are intended to benefit from the assets in due course and (c) those to whom the donor has entrusted the job of looking after the assets and opening up the piggybank in appropriate circumstances to pay something out. Sometimes the boundaries between these categories can be blurred and an individual can fall into more than one. Trusts may be created in life or on death by using a will.

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