A trust can be set up for a number of reasons. Some people may choose to set up a trust for estate planning purposes while others may choose a trust for will writing and inheritance purposes. Some trusts are set up because the person is either too young to own and manage property and assets or is invalid and therefore cannot ensure the management of his assets.
The process of creating a trust can be made simple if you start by getting the terminologies right and understanding why you are setting up a trust. So, to start with the creation of a trust, you need to understand certain terminologies-the ‘settler’, the ‘trustee’ and the beneficiary.
The settler is the person/ organization responsible for creating the agreement i.e. the trust
The trustee is the person who is responsible for disbursing the assets
The beneficiary is the one to who’s intended benefit the trust was created.
Once you have identified the settler, trustee and beneficiary the next step would be to draft the ‘trust document’. In fact, a trust is formed by simply writing up a trust document outlining the intentions behind the formation of a trust by the settler for example it may involve deciding about how the person’s assets will be distributed and managed after his death. In the event where the trust was formed for inheritance purposes, the trust document very often may take the form of the person’s will.
After having drafted the conditions and intentions of the trust, the next thing is to have it signed by the settler and the trustee.
The next step towards the formation of a trust is to constitute it as a legal entity and this can only be done if it meets the following criteria as stipulated by the UK law:
-Clear evidence that the settler wishes to form a trust i.e. he was not forced into doing so.
-Identification of the object of the trust, i.e. the assets which is supposed to be transferred
-The identification of the person who is intended to benefit from the trust
In the case where the trust was formed as part of a will, all the documents should be signed by the settler and two witnesses although another person may sign on the settler’s behalf if he is incapable of doing so.
In order for a trust to be viable, the settler should be mentally capable at the time of setting up. The above steps have been written only to give you an overall idea about how to set up a trust and it is highly recommended to seek professional legal advice before actually setting up a trust.
