What is a Trust?

A trust is a legal vehicle or fiduciary arrangement that allows a third party, a trustee, to hold, manage and direct assets that are held within it on behalf of a beneficiary or beneficiaries.

Trusts are used for a variety of reasons, including the protection of assets, managing forced heirship rules or simply preserving family wealth for the future.

They are considered by many as one of the most valuable financial planning tools yet can sometimes be one of the least understood.

A trust expands your options when it comes to managing your assets and also offers tax benefits to those subject to inheritance tax, which can assist in maximising the wealth you can pass on to future generations.

Thinking about setting up a trust but unsure how it works? This article delves deeper into the key components of a trust and the advantages one can provide once set up.

Why Establish a Trust

There are many reasons a person would choose to establish a trust but the main reasons include:

– Asset Protection
– Succession Planning
– Confidentiality
– Preservation of Wealth
– Flexibility in Distribution
– Divide assets and property
– Circumvention of Forced Heirship

What assets can be held in a trust?

There are wide varieties of trusts you can use, in which your asset(s), also known as ‘trust property’ can be placed.

Assets can include cash, real estate, shares, land, luxury assets i.e. yachts, aircraft, collectibles, investments, life insurance policies, securities and any other personal belongings that you wish to protect or pass on to a loved one.

What are the key components of a trust?

A trust is a legal entity or structure, which is ultimately designed for the protection, growth and distribution of assets. The various ‘parties’ involved in the set-up, management and administration of a trust play different roles and have varying responsibilities that must be meticulously performed in order for the trust to meet its objectives successfully.

The Settlor

The Settlor is the individual or entity that establishes a trust by transferring legal title of a specific asset (or assets) to the Trustee(s) and deciding how it/they will be used.

The Settlor has a limited but fundamental role in the establishment of the trust – a trust cannot exist until the Settlor expresses such ‘intention’ for a trust to exist and the intended assets are transferred to the Trustee(s) accordingly.

Trust Deed

A Trust Deed, also known as a Declaration of Trust, is a legally binding document through which the legal owner(s) of the asset(s) declare that they hold the property in a trust for the benefit of one or more of the Beneficiaries. The use of such asset(s) will be decided by the Settlor and set out accordingly in the Trust Deed and their Letter of Wishes.

Letter of Wishes

The Letter of Wishes is a document drawn up to accompany a trust, which expresses the wishes of the Settlor.

Albeit not a legally binding document, the Letter of Wishes should be taken into account, and in practice is usually followed by the Trustees as it provides guidance and outlines how the Settlor wishes the asset(s) and Beneficiary/ies of a trust to be treated.

The Beneficiary/ies

The Beneficiary/ies can be an individual or group of individuals for whom a trust has been established. They are the person or persons that have equitable title to the assets held within a trust and subsequently have the right to benefit from them.

Benefits may include income from a trust, ownership of an asset within a trust or the capital of a trust. A Beneficiary may include parents, spouses, children, grandchildren or charitable organisations.

The Protector

The Protector of a trust is a third party, either an individual or entity, who is appointed under the Trust Deed to exercise certain powers in relation to the trust.

The powers, duties and obligations of the Protector will be defined in the Trust Deed but can vary with different types of trusts. That said, where a Trust Deed includes a Protector, it often empowers the Protector to remove and/or appoint trustees and offers the powers of veto over trustee decisions. The role of the Protector is ultimately to protect the Beneficiaries and is usually someone known or close to the Settlor.

The Trustee

A Trustee becomes the legal owner of any asset(s) held within a trust without having the right to gain economic enjoyment out of said asset(s).

A Trustee can be an individual or an entity specifically named by the Settlor.

The Trustee acts as a custodian and has a fiduciary obligation to act in the best interests of a trust’s Beneficiary/ies. They are responsible for the care and administration of any asset(s) held in the trust as set out in the Trust Deed (Declaration of Trust) and according to the Settlor’s wishes.


Sentient International has the knowledge and experience required to deliver solutions that are best suited to your needs and offer a comprehensive range of fiduciary services, which include trust establishment and the provision of professional trustees.

A trustee holds a position of significant trust and is expected to perform their duties to the highest ethical standards and with complete integrity.

Our professional trustees understand the importance of our clients’ wishes. As such, we consider it integral to develop a relationship with each client and to work closely with their advisors, to ensure that any structure we establish properly reflects a client’s intentions and meets their objectives.

For more information on how we can assist you with the establishment and administration of a trust, please contact info@sentientinternational.com or call us on +44 1624 616544.

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