A Trust Explained in Simple Terms
Parry Field Lawyers provide legal advice on a range of trust matters including entry into and operation of family trusts and charitable trusts.
A Transcript of the video follows:
A lot of people, even after forming a trust and having dealt with their professional advisor, their lawyer or their accountant still don’t really understand what a Trust is all about and they are a little bit embarrassed to say or show they don’t understand.
In seminars that we take I often use a simple illustration which people say they find helpful.
I usually get two people at the front of the room to stand up and hold onto a coin, I get them to jointly hold onto the coin like this and to keep doing so while I talk. So while they are standing there, rather sheepishly, I then say to the rest of the people in the room, I want you to imagine I have just given this coin to these two people here and I have asked them to hold this coin on behalf of everyone in the room, including me, including themselves and all of you.
They can choose weather they give that coin to any one of you or share it amongst all of you. In doing that I have essentially formed all the elements of a trust.
I was the settlor, that’s the word we use for the person that creates the trust, the two people standing holding the coin were my trustees and you notice they were holding it together. They can only deal with the trust property jointly. And the beneficiaries of course was everyone in that room including them and myself.
They have the discretion as to what they did with the trust fund off course the trust fund gets added to later on. But that is essentially what a trust is all about. Perhaps the only thing missing is a set of rules or limitations on what those trustees can do. We call that the Trust Deed, and the Trust Deed of course is something that you would put together with your professional advisor. So if you can imagine that as the idea of a trust then you can put almost any form of property into that trust and those trustees have the power to deal with it in the way I have just described.
You may find that helpful but of course there are alot of other things that go along side those ideas but that’s the basic essence of a trust.
