11 Sep The Minute Trust – The trust, a tool built on confidence
Director, Trust Administration and Wealth Engineering
What is the origin of the Trust institution? It dates back to Anglo-Norman feudal times, more precisely during the Crusades in the Holy Land. Before leaving their land, knights would transfer their feudal rights to someone in trust, who would administer and transfer these rights to the knight’ family should he not return.
A Trust is, above all, an asset-management tool based on a relationship of confidence between a trustee and a settlor. From a legal perspective, the settlor of the trust parts with the ownership of the assets and transfers them to a trustee to administer for the benefit of the trust’s beneficiaries. In a discretionary trust, beneficiaries do not have legal title to the assets in the trust either. They only have the expectancy of receiving the trust’s assets. The ownership is thus divided between the trustee (legal ownership) and beneficiaries (beneficial ownership). Although civil law from continental Europe is foreign to this division of ownership, it is recognized under Anglo-Saxon common law and equity, which has since been widely exported to various jurisdictions throughout the world.
Of course, the trustee must be trustworthy. The trustee is accountable to beneficiaries who can demand at any time that the trustee accounts for his administration of the trust. In the event of a failure to meet fiduciary obligations of loyalty, honesty, prudence and acting in the best interest of all beneficiaries, the trustee can be reprimanded or revoked by the court at the beneficiary’s request.
The dispossession of assets can at first glance seem extreme for a settlor. Nevertheless, trusts are a nearly thousand-year-old institution whose recognition and effects are not questioned, either in common law or civil law jurisdictions. It is essential, however, that the settlor have faith in the managerial and administrative abilities of the trustee.
For today’s affluent families, business executives and entrepreneurs, wealth planning is crucial. Because of their flexibility and rigour, trusts ensure that your wishes for your financial security and that of your family will be respected.
One can readily understand, the Trust is more than just an estate-planning tool; it is, first and foremost, a reliable and recognized means of protecting its estate for its transfer. What are the methods of setting up? The team at Blue Bridge is able to answer all your questions and assist you with your heritage planning.