WHAT IS A TRUST?
A trust is a legal obligation that comes into existence when an individual or other legal entity (known as the Settlor) transfers the legal ownership of assets – which may be of almost any type – to another person or persons (known as the trustees) to hold not for their own benefit but for the benefit of the beneficiaries who can be individuals or otherwise. It is essential that the transfer is gratuitous otherwise the transaction takes on the characteristics of some other legal entity.
A trust may therefore be defined as an equitable obligation which binds the trustees to hold and deal with the trust assets for the benefit of the beneficiaries in accordance with the terms of the trust.
HOW IS A TRUST CREATED?
Most trusts are established by a written document executed by both the Settlor and trustees in which is set out the duties and powers of the trustees.
Trusts created by written document will generally take one of two forms:
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A settlement: this form of document will be entered into and signed by both the Settlor and the trustee and so provide clear evidence of the intentions of both parties and of the agreed obligations assumed by the trustee.
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A declaration of trust: this form of document is entered into and executed by the trustee only, and records that the trustee has received certain property, specified in the document, to hold upon the terms set out in the document.
It is sometimes more convenient to create a trust by declaration of trust rather than by settlement, for example, the Settlor may not be available to sign the document, when it is prepared. Moreover, a declaration of trust preserves confidentiality as to the source of the trust assets.
A trust can also arise on death under the terms of a will. It is also possible, subject to certain exceptions, to create a trust orally, with no written evidence of its existence.
There is no requirement to register with any authority the creation of a trust in or subject to the law of Jersey, nor is a copy of the trust instrument available for public inspection; a trust remains a private agreement between the Settlor, the trustees and the beneficiaries.
Moreover, there are no stamp duties or other fiscal charges payable on establishing a trust.
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