The people involved

There are three groups of people involved in a trust. These people are referred to as: the settlor, the trustee and the beneficiary. In this section we will explain what these groups do and outline their responsibilities and rights


The Settlor

Take and Chair for settlor

The person setting up the trust up is known as the “Settlor”. It is the settlor who transfers the property (money, insurance policies, houses or land) into the trust.

The settlor appoints trustees to administer the trust and also decides who the beneficiaries will be. The settlor can either: state exactly who the beneficiary should be, or they can nominate a number of people to be potential beneficiaries, leaving the final decision of beneficiary up to the trustees when the trust is distributed.  

Where the settlor hasn’t stated exactly who is to benefit, they can still indicate who they would particularly like the beneficiaries to be. They can do this by lodging an "Expression of Wishes Letter" with the trust. This type of arrangement is particularly useful in the case of discretionary trusts, where the trustees have discretion as to who should benefit from the list of potential beneficiaries. The Expression of Wishes Letter helps guide trustees when it’s time to distribute the money.  

If the settlor wants to put a life assurance policy in trust, it must be a policy that they own, but it doesn’t have to be one that covers them. This may sound confusing but it’s actually surprisingly easy, the concept is referred to as “Life of Another”.   Where joint life assurance is taken, both parties must consent to put the plan into the trust; they are then referred to as “Joint Settlors”

The Trustees

Trustees at a table - meeting

Trustees are the legal owners of the trust property. They administer the trust for the sole benefit of the beneficiaries.

There really needs to be at least two trustees. The trustees must administer the trust in accordance with the terms of the trust document and the law that governs the trust. In most cases the settlor also becomes a trustee.   see our guide for trustees  >>>

It’s important to choose the right trustees. They need to have good financial knowledge and be someone the settlor can trust. It could be a friend, a member of the settlor’s family or even a professional adviser. The settlor can appoint a professional trustee who will usually charge for their services. However, it is not necessarily a good idea to ask a beneficiary to become a trustee as this may lead to a conflict of interests.  

In England and Wales a trustee must be over the age of 18. They should be mentally able and have a sound financial history.

The Beneficiary

 Calender with Date - Beneficiaries ?

The beneficiary(ies) are the people the settlor wants to receive the benefits they are giving away. In a trust there can be different types of beneficiary depending on the exact wording of the trust. It's important therefore that the settlor makes it very clear to the trustees what they want each beneficiary to receive.

Once the settlor has put a life insurance plan into trust, the trustees will hold onto it until the settlor dies and a payment is made under the policy. The trustees then look after the money, investing it if necessary, and distribute it amongst the beneficiaries.  

Most commonly trusts are used to hold onto property the settlor wants to give to their children, but a trust can be used to hold onto property the settlor wants to give away to just about anyone.  .