SETTLOR

In law a Settlor is a person who settles property on express trust for the benefit of beneficiaries. In some legal systems, a settlor is also referred to as a trustor, or occasionally, a grantor or donor.[1] Where the trust is a testamentary trust, the settlor is usually referred to as the testator. The settlor may also be the trustee of the trust (where he declares that he holds his own property on trusts) or a third party may be the trustee (where he transfers the property to the trustee on trusts). In the common law it has been held, controversially, that where a trustee declares an intention to transfer trust property to a trust of which he is one of several trustees, that is a valid settlement notwithstanding the property is not vested in the other trustees

TRUSTEE

Trustee is a legal term that refers to a holder of property on behalf of a beneficiary. A trust can be set up either to benefit particular persons, or for any charitable purposes (but not for non-charitable purposes): typical examples are a will trust for the testator's children and family, a pension trust (to confer benefits on employees and their families), and a charitable trust. In all cases, the trustee may be a person or company, whether or not they are a prospective beneficiary

FIDUCIARY DUTY

A Fiduciary Duty is the highest standard of care imposed at either equity or law. A fiduciary is expected to be extremely loyal to the person to whom they owe the duty (the "principal"): they must not put their personal interests before the duty, and must not profit from their position as a fiduciary, unless the principal consents. The fiduciary relationship is highlighted by good faith, loyalty and trust, and the word itself originally comes from the Latin fides, meaning faith, and fiducia.
When a fiduciary duty is imposed, equity requires a stricter standard of behaviour than the comparable tortious duty of care at common law. It is said the fiduciary has a duty not to be in a situation where personal interests and fiduciary duty conflict, a duty not to be in a situation where their fiduciary duty conflicts with another fiduciary duty, and a duty not to profit from their fiduciary position without express knowledge and consent. A fiduciary cannot have a conflict of interest. It has been said that fiduciaries must conduct themselves "at a level higher than that trodden by the crowd."

TRUST INSTRUMENT

A trust instrument (also sometimes called a deed of trust, where executed by way of deed) is an instrument in writing executed by a settlor used to constitute a trust. Trust instruments are generally only used in relation to an inter vivos trust; testamentary trusts are usually created under a will

TYPES OF TRUST

In the United Kingdom, five main types of trust have developed:

Interest in possession trust. Interest in possession trusts (sometimes called "life interest trusts") are often created as part of wills and are structured in such a way that the surviving spouse, or "life tenant", will have a right to receive an income for the rest of his or her life, or for a fixed period at least.
Accumulation and Maintenance trust. "A&M" trusts arose in the 1970s because of changes to UK tax law. They exist for young beneficiaries and give the trustees discretion to pay money for their benefit. Until recently they have enjoyed special tax treatment, but the Finance Act 2006 changed this.
Discretionary trust. Trustees of a discretionary trust can often choose the beneficiaries, based on a "class" specified by the settlor. Alternatively, they may have a fixed group of beneficiaries to choose from, but they can decide which beneficiaries (if any) are to benefit and to what extent, so long as the decision is based on the beneficiaries' best interests.
Bare trust. Where there is a bare trust, the trustees can deal with the property as usual but the beneficiaries have an absolute right to demand any or all of the property at any time. The trustees are therefore mere agents of the beneficiaries. In the USA the term simple trust is used (see below).
Charitable trust. Charitable trusts have a unique position in English law. They have special tax advantages, they do not have to end after a certain period of time (unlike other types of trusts), they will not be void if their objects are uncertain. They encourage charitable giving

CONSTRUCTIVE TRUST

Unlike an express or implied trust, a constructive trust is not created by an agreement between a settlor and the trustee. A constructive trust is imposed by the law as an "equitable remedy." This generally occurs due to some wrongdoing, where the wrongdoer has acquired legal title to some property and cannot in good conscience be allowed to benefit from it. A constructive trust is, essentially, a legal fiction. For example, a court of equity recognizing a plaintiff's request for the equitable remedy of a constructive trust may decide that a constructive trust has been "raised" and simply order the person holding the assets to the person who rightfully should have them. The constructive trustee is not necessarily the person who is guilty of the wrongdoing, and in practice it is often a bank or similar organisation

EXPRESS TRUST

An express trust arises where a settlor deliberately and consciously decides to create a trust, over his or her assets, either now, or upon his or her later death. In these cases this will be achieved by signing a trust instrument, which will either be a will or a trust deed. Almost all trusts dealt with in the trust industry are of this type. They contrast with resulting and constructive trusts. The intention of the parties to create the trust must be shown clearly by their language or conduct. For an express trust to exist, there must be certainty to the objects of the trust and the trust property. In the USA Statute of Frauds provisions require express trusts to be evidenced in writing if the trust property is above a certain value, or is real estate.

FIXED TRUST

In a fixed trust, the entitlement of the beneficiaries is fixed by the settlor. The trustee has little or no discretion. Common examples are:
a trust for a minor ("to x if she attains 21");
a life interest ("to pay the income to x for her lifetime"); and
a remainder ("to pay the capital to y after the death of x")

HYBRID TRUST

A hybrid trust combines elements of both fixed and discretionary trusts. In a hybrid trust, the trustee must pay a certain amount of the trust property to each beneficiary fixed by the settlor. But the trustee has discretion as to how any remaining trust property, once these fixed amounts have been paid out, is to be paid to the beneficiaries

IMPLIED TRUST

An implied trust, as distinct from an express trust, is created where some of the legal requirements for an express trust are not met, but an intention on behalf of the parties to create a trust can be presumed to exist. A resulting trust may be deemed to be present where a trust instrument is not properly drafted and a portion of the equitable title has not been provided for. In such a case, the law may raise a resulting trust for the benefit of the grantor (the creator of the trust). In other words, the grantor may be deemed to be a beneficiary of the portion of the equitable title that was not properly provided for in the trust document

INTER VIVOS TRUST

A settlor who is living at the time the trust is established creates an inter vivos trust

IRREVOCABLE TRUST

In contrast to a revocable trust, an irrevocable trust is one which will not come to an end until the terms of the trust have been fulfilled.
Offshore trust. Strictly speaking, an offshore trust is a trust which is resident in any jurisdiction other than that in which the settlor is resident. However, the term is more commonly used to describe a trust in one of the jurisdictions known as offshore financial centers or, colloquially, as tax havens. Offshore trusts are usually conceptually similar to onshore trusts in common law countries, but usually with legislative modifications to make the more commercially attractive by abolishing or modifying certain common law restrictions. By extension, "onshore trust" has come to mean any trust resident in a high-tax jurisdiction

PRIVATE AND PUBLIC TRUST

A private trust has one or more particular individuals as its beneficiary. By contrast, a public trust (also called a charitable trust) has some charitable end as its beneficiary. In order to qualify as a charitable trust, the trust must have as its object certain purposes such as alleviating poverty, providing education, carrying out some religious purpose, etc. The permissible objects are generally set out in legislation, but objects not explicitly set out may also be an object of a charitable trust, by analogy. Charitable trusts are entitled to special treatment under the law of trusts and also the law of taxation

PROTECTIVE TRUST

Here the terminology is different between the UK and the USA:
In the UK, a protective trust is a life interest which terminates on the happening of a specified event such as the bankruptcy of the beneficiary or any attempt by him to dispose of his interest. They have become comparatively rare.
In the USA, a protective trust is a type of trust that was devised for use in estate planning. (In another jurisdiction this might be thought of as one type of asset protection trust.) Often a person, A, wishes to leave property to another person B. A however fears that the property might be claimed by creditors before A dies, and that therefore B would receive none of it. A could establish a trust with B as the beneficiary, but then A would not be entitled to use of the property before they died. Protective trusts were developed as a solution to this situation. A would establish a trust with both A and B as beneficiaries, with the trustee instructed to allow A use of the property until they died, and thereafter to allow its use to B. The property is then safe from being claimed by A's creditors, at least so long as the debt was entered into after the trust's establishment. This use of trusts is similar to life estates and remainders, and are frequently used as alternatives to them

PROTECTOR

A protector may be appointed in an express, inter vivos trust, as a person who has some control over the trustee — usually including a power to dismiss the trustee and appoint another. The legal status of a protector is the subject of some debate. No-one doubts that a trustee has fiduciary responsibilities. If a protector also has fiduciary responsibilities then the courts — if asked by beneficiaries — could order him or her to act in the way the court decrees. However, a protector is unnecessary to the nature of a trust — many trusts can and do operate without one. Also, protectors are comparatively new, while the nature of trusts has been established over hundreds of years. It is therefore thought by some that protectors have fiduciary duties, and by others that they do not. The case law has not yet established this point

PURPOSE TRUST

Or, more accurately, non-charitable purpose trust (all charitable trusts are purpose trusts). Generally, the law does not permit non-charitable purpose trusts outside of certain anomalous exceptions which arose under the eighteenth century common law (and, arguable, Quistclose trusts). Certain jurisdictions (principally, offshore jurisdictions) have enacted legislation validating non-charitable purpose trusts generally

RESULTING TRUST

A resulting trust is the form of implied trust which occurs where a trust fails, wholly or in part, as a result of which the settlor becomes entitled to the assets

REVOCABLE TRUST

A trust of this kind can be "revoked" (cancelled) by its settlor at any time. Revocable trusts are common outside the USA, but (for tax reasons) they are usually only used in situations where the settlor or a major beneficiary has a USA connection

SECRET TRUST

A secret trust is a trust which arises when property is left to a person (the legatee) under a will on the understanding that they will hold the property as trustee for the benefit of beneficiaries who are not named in the will

SPECIAL TRUST

In the USA, a special trust contrasts with a simple trust (see above).
A Spendthrift trust is a trust put into place for the benefit of a person who is unable to control their spending. It gives the trustee the power to decide how the trust funds may be spent for the benefit of the beneficiary

TESTAMENTARY ( WILL ) TRUST

A trust created in an individual's will is called a testamentary trust. Because a will can become effective only upon death, a testamentary trust is generally created at or following the date of the settlor's death.
Trustee. One who is responsible for a trust

UNIT TRUST

A unit trust is a trust where the beneficiaries (called unitholders) each possess a certain share (called units) and can direct the trustee to pay money to them out of the trust property according to the number of units they possess. A unit trust is a vehicle for collective investment, rather than disposition, as the person who gives the property to the trustee is also the beneficiary