What is a trust?
A trust is a legal arrangement which distinguishes between the legal and beneficial ownership of property. Legal ownership is transferred to a trustee who manages and administers the property for the benefit of the beneficiaries, or for the furtherance of certain purposes. It is an arrangement intended for the safekeeping, management and eventual disposal of property.
Trusts terminology
The settlor (or grantor) of the trust is the owner of the assets to be placed or ‘settled’ on trust. The settlor creates the trust and may also benefit under its terms. The assets settled on trust comprise the trust fund.
The trustees are the individuals or companies to which the legal ownership of the property is transferred and who are empowered to hold, administer and distribute such assets in accordance with the terms of the trust. BVI trusts are generally administered by professional corporate trustees regulated by the BVI Financial Services Commission (“FSC”), but are also often administered by trustees in other jurisdictions.
A trust is normally documented by a trust instrument or trust deed which sets out the terms on which the settlor and the trustees have agreed that the latter will hold and administer the trust fund. The trust instrument will generally identify the beneficiaries of the trust, that is, those persons intended to benefit from the trust fund, and/or the purposes the trust was established to further.
