| A trust is a set of obligations binding
one or more persons, called a Trustee, to deal with real
and personal property over which the Trustee has legal control
for the benefit of certain designated persons called the
beneficiaries. Generally, a trust is created by a written
document which sets forth the manner in which the Trustee
must deal with the Trust Property. The written document
which establishes the Trust is known as the Trust Agreement
or Deed of Trust.
The creation of a trust generally involves four
elements: |
| 1. |
The Settlor
is the person or persons who establishes the Trust by transfer
during his or their lifetime (an Inter Vivos Trust) or by
transfer after his death in accordance with a last will and
testament (a Testamentary Trust); |
| 2. |
The Trustee is the party to whom
the Settlor entrusts the care and management of the Trust
Property. The Trustee has the responsibility of carrying out
the instructions contained in the Trust Agreement. As will
be mentioned later, the Settlor may serve as the Trustee of
a Trust; |
| 3. |
In accordance with the
wishes of the Settlor, the Beneficiaries are those persons
to whom the trust property and income are to be given. Some
trusts have two classes of beneficiaries: Income beneficiaries,
those to whom trust income is to be paid, and ultimate beneficiaries,
those to whom the Trust Property is to be distributed; and
|
| 4. |
The Trust Property,
without which the trust could not exist. Trust Property can
include money, stocks, real and personal property or other
assets located anywhere in the world provided that the Trustee
can obtain legal title to the asset. |
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