Trusts and Trustees
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Trusts Legal Terms Explained
We hope you find our jargon buster on Trusts and Trustees useful. For specialist advice and more information on setting up trusts contact a member of our Trusts and Trustees team.
Asset : A possession which has value, such as a house, land, cash or securities.
Beneficiary (of a trust) : The person who will benefit from the trust.
Discretionary trust : A trust under which no individual has a right to an interest in possession. Generally, the trustees have the power to decide who should receive the capital or income from the trust.
Disposition : A disposal or transfer of property or cash, including both the creation and the release of any debt or right.
Charitable trust : A trust which is held indefinitely for charitable purposes only.
Capital Gains Tax (CGT) : A tax on the profits made from selling something you own.
Charity : For Inheritance Tax purposes a charity is a UK registered charity or other qualifying body. Other qualifying bodies include organisations such as hospices.
Income Tax : The tax is based on an individual’s gross earned income (salaries, wages, tips, and dividends if stock is owned) plus unearned income less deductions, exemptions or credits. Both businesses and individuals are subject to income taxes.
Inheritance Tax : A tax on the value of a person's estate on death and on certain gifts made by an individual during their lifetime.
Interest in possession : Generally a person has an interest in possession in property held in trust if they have the immediate right to use or enjoy the property or receive any income arising from it.
Maintenance : The application by the trustees, for the benefit of the beneficiary, of the whole or part of the income from property held in trust.
Settlor : The person who creates a trust.
Settled property, Settlement : A settlement occurs when property is held in trust for successive beneficiaries. The property which a settlor puts into trust is known as the trust fund or ‘settled property'.
Trust : An obligation binding a person who holds the legal title, the trustee, to deal with the property for the benefit of another person; the beneficiary. A trust is an arrangement where money or property is owned and managed by one person (or persons, or organisations) for the benefit of another beneficiary. A trust is created by a settlor, who entrusts some or all of his or her property to people, of his or her choice (the trustees). The trustees are the legal owners of the trust property, but they are obliged to hold the property for the benefit of one or more individuals or organisations (the beneficiary) by the settlor. The trustees owe a fiduciary duty to the beneficiaries, who are the 'beneficial' owners of the trust property.
Trust Corporation : The Public Trustee or any corporation either appointed by the court in any particular case to be a trustee or entitled to act as a custodian trustee under the Public Trustee Rules 1912.
Trust fund : Property, money or securities, held or settled in trust. See settlement.
Trustee : The person who holds the legal title to settled property and who is obliged to deal with the property for the benefit of the beneficiaries.
Trustee securities : Those securities in which trustees are permitted to invest trust moneys by virtue of the provisions of the Trustee Act 1925 (as amended by the Trustee Investment Act 1961).
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