What is a trust?
A trust is a fiduciary relationship between a trustee and a settlor, by which the settlor transfers his assets to the trustee and which binds the trustee to administer these assets in the best interest of the beneficiaries of the trust, and to distribute benefits to them.
The overriding duty of a trustee is to protect the trust fund.
A failure in that duty may mean that the trustee could be responsible for a breach of trust and be held liable to the beneficiaries for any resultant loss.
Individuals use trusts to plan their inheritance in a flexible and efficient fashion. Trusts are suitable to plan the devolution of one’s estate to the next generation.
Indeed, if one holds a private account in bank or shares in listed or private companies, upon one’s passing the bank or the company directors will need obtain a heirship certificate in continental Europe, or letters of probate in the Common law world, prior to any money being disbursed to the heirs. This is often a time-consuming exercise, putting at risk the welfare of the deceased’s family.
Assets held in trust will be distributed immediately, if this was the settlor’s desire, upon the Trustees receiving the proof of the Settlor’s death.
The Deed of Trust, which governs the relationship between the settlor, trustee and beneficiaries, will be drafted to comply with the needs of the Settlor and the legal environment in his country of residence.