Trusts are an arrangement developed under British common law whereby an individual transfers legal ownership of property to a Trustee, who then holds this property "in-trust" for the benefit of others - the beneficiaries. The terms of this arrangement are set out in a trust document, usually referred to as a Declaration of Trust.
The five main components to a Trust are as follows:
The Settlor - an individual who creates the Trust and transfers legal ownership of property to the Trustee. It is possible for the Settlor to be a Trustee and a beneficiary of the Trust also, however this is unusual. Once the Settlor has transferred the property he has no further obligations or responsibilities.
The Trustee - an individual or corporation who holds legal ownership of the settled property for the benefit of the beneficiaries described in the Trust document. The Trustee has the responsibility of ensuring that the terms and conditions of the Trust arrangement are carried out.
The Beneficiary- the person or persons who will benefit from the assets held in the Trust.
The Protector - the Protector is a person or corporate entity who is assigned certain powers and responsibilities by the Settlor. The Protector can be given the power to add or remove a beneficiary. The Protector may also be given the power to replace the Trustees as well as the domicile of the Trust.
The Trust Assets - the assets that are originally settled in the Trust together with any assets settled at a later date. The assets will be managed or invested by the Trustee in accordance with the Trust arrangement.