What is a trust?
A trust is a legal entity that has the status of a human adult in the eyes of the law. It is established when a person known as the Founder drafts a trust deed, registers it with the Deeds Office and transfers assets to the Trust for the benefit of a third party, known as the “beneficiary.” The person who manages the assets of the trust is called a trustee. He/she does not own those assets and can incur criminal liability if they abuse the assets under their care.
Here are the key components of a trust:
1. Founder/Donor: This is the person who creates the trust and transfers their own assets into it. The Founder defines the terms and conditions of the trust and determines who will be the beneficiaries.
2. Trustee: The trustee is responsible for managing and administering the assets held in the trust according to the instructions outlined by the Founder in the trust deed. The trustee has a legal obligation to act in the best interests of the beneficiaries and must adhere to the terms of the trust. Certain crimes arise out of an abuse of trust assets such as “theft of trust property” when a trustee converts trust assets or income for their personal benefit as opposed to remitting it for the benefit of the beneficiaries to the trust.
3. Beneficiary: The beneficiary is the person who will benefit from the assets held in the trust. The Founder can designate one or multiple beneficiaries and specify how and when the assets will be distributed to them. Beneficiaries can include individuals, organizations, charities, or even future generations.
4. Trust Property/Assets: These are the assets, such as money, real estate, investments, or personal belongings, that the Founder transfers into the trust. Once transferred, the assets become separate from the Founder’s personal assets and are held by the trustee on behalf of the beneficiaries.
To establish a trust, you have to engage a lawyer who is a Notary Public to draft the deed of transfer per your instructions and to register it so that it is recognized by the law. A trust can be a very good way to protect your assets and ensure that future generations benefit from your hard work.
The author of this snippet is Simon Flemming Mutandi, a lawyer who writes in his personal capacity. The purpose of these pieces is to share basic legal information with non-lawyers. For more information contact 0783475020 or email simonflemming1@gmail.com.
The Legal Digest 