Understanding Your Trust

An express private trust is a legal arrangement in which one party (the Settlor) transfers property to another party (the Trustee) to hold and manage for the benefit of specified persons (the Beneficiaries), as expressly declared in a trust deed.

James transfers his investment portfolio to his sister Sarah, as Trustee, to hold for the benefit of his two children — creating an express private family trust with a formal deed.

The Settlor is the individual who creates the trust by settling property into it. The Settlor declares the trust, defines its purpose, and transfers the initial trust property to the Trustee.

The Settlor establishes the terms under which the trust operates. Once assets are transferred, the Settlor generally ceases to be the legal owner of those assets.

The Trustee holds legal title to the trust property and administers it according to the terms of the trust deed, always acting in the best interests of the Beneficiaries.

Trustees have strict legal duties including the duty of care, duty of loyalty, duty to act impartially, and duty to follow the terms of the trust deed.

Beneficiaries are the persons or entities who receive the benefit of the trust property. They may receive income, capital, or both, depending on the trust terms.

Beneficiaries may be fixed (entitled to specified shares), discretionary (at Trustee discretion), or a combination. They may be individuals, charities, or other entities.

A Protector is an optional appointee who holds defined powers of oversight over the Trustees — such as the power to remove and replace Trustees or consent to certain transactions.

The Protector role provides an additional layer of governance, often used in long-term or complex trusts to ensure the Settlor's original intentions are maintained over time.

A trust deed is typically executed as a deed — signed by the Settlor and Trustee(s) in the presence of independent witnesses, who also sign the document.

The requirements for valid execution vary by jurisdiction. Always obtain independent legal advice before signing any trust deed to ensure proper execution in your jurisdiction.