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Trust Terminology
Asset: A possession which has a value, such as a house, land, cash or securities.
Beneficiary: The person who will benefit from the trust.
Charitable trust: A trust which is held indefinitely for charitable purposes.
Charity: A charity may be a Trust, Foundation, Association or other qualifying body set up for charitable purposes only. In order to qualify for tax purposes, a Charity must be registered with the appropriate authorities.
Capital Gains Tax (CGT): A tax on the profits made from selling an asset such as property, shares in a portfolio, a work of art etc.
Discretionary trust: A trust under which no individual has a right to an interest in possession. Generally, the trustees have the power to decide who should receive the capital or income from the trust.
Income Tax: Is based on the trust's gross earned income (typically dividends andinterest income).
Inheritance Tax: A tax on the value of a person's estate on death and on certain gifts made by an individual during their lifetime.
Interest in possession: Generally a person has an interest in possession in property held in trust if they have the immediate right to use or enjoy the property or receive any income arising from it.
Private trust company: A Private Trust Company is a company formed for the specific purpose of acting as trustee of a single trust, or a group of related trusts.
Settlor: The person who creates a trust.
Settled property, Settlement: A settlement occurs when property is held in trust for successive beneficiaries. The property which a settlor puts into trust is known as the trust fund or ‘settled property'.
Trust: A trust isa binding obligation whereby money or property is owned and managed by one person (or persons or organisations) for the benefit of another. A trust is created by a settlor, who entrusts some or all of his or her property to people of his or her choice (the trustees). The trustees are the legal owners of the trust property, but they are obliged to hold the property for the benefit of one or more individuals or organisations (the beneficiary). The trustees owe a fiduciary duty to the beneficiaries, who are the 'beneficial' owners of the trust property.
Trustee: The person or trust company who holds the legal title to settled property and who is obliged to deal with the property for the benefit of the beneficiaries.
Trust fund: Property, money or securities, held or settled in trust.