Answering Sean’s question left in comments on The origins of Trusts...:
"Sean - Could you please explain what is meant by A, B and C ?"
Just like in physics all smallest particles can be explained, in Trust all parties can be explained! I want to do it short, well, as short as possible, in order to understand something, as we see there is plenty of information, but it is always so long and tends to be very complicated.
At the very basic level, the concept of the trust is when a person (Settlor) places assets in the legal custody of another person (Trustee). Subsequently the trustee holds the assets for the benefit of some third party (Beneficiary). The trust is not a separate legal entity, but more of a legal "obligation" agreed between the two parties - the settlor and the trustee. This agreement is outlined in formal documents, which is known as the Trust Deed.
The settlor is the person who creates the trust by placing a certain asset that s/he owns into the Trust, i.e. by transferring that asset to another person (trustee) along with clear instructions that the asset be held for the benefit of a third party. To qualify as an international trust, the Settlor must at all times be "non-resident" in Belize. The settlor may be either an individual or a legal entity.
The trustee is the person who holds the assets for the benefit of the beneficiary. While in full control of the trust assets, the trustee is under a legal obligation to maintain the trust property in the best possible manner for the benefit of the Beneficiaries. The trustee is legally precluded from using the trust asset for his own ends.
The beneficiary is the third party for whose benefit and profit the trust asset is held and managed by the trustee. The beneficiary or beneficiaries may be either specifically named in the Trust Deed or may be a sufficiently defined group of persons (for example “all children and grandchildren”). As a particular twist, the settlor of a trust may also be named as the beneficiary. To qualify as an international trust, the beneficiaries must at all times be "non-resident" in Belize.
The protector is not a mandatory party to trust, but may be chosen by the settlor. The function of the protector is to supervise the trustee, thus providing additional assurances to the settlor that the trust assets are properly managed. In extreme circumstances, the protector may remove or replace the trustee. The function of the protector is usually it is vested in a trusted friend or advisor of the settlor.
Idea for thought: The trust may also be created for charitable purposes. Why do I mention this?! In case of charitable trust no beneficiaries need to be listed…
Thank you for reading my post! And you are welcome to leave comments, feedback, sugestions for other posts or contact me for more information.
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