A trust is a legal relationship created (in lifetime, or on death) by a settlor (www.practicallaw.com/7-107-7245) when assets are placed under the control of a trustee (www.practicallaw.com/8-107-7419) for the benefit of a beneficiary (www.practicallaw.com/9-382-5565), or for a specified purpose.
A trust has the following characteristics:
The trust assets constitute a separate fund and are not a part of the trustee's own estate.
Legal title to the trust assets stands in the name of the trustee, or in the name of another person on behalf of the trustee.
The trustee has the power and the duty, in respect of which he is accountable, to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed upon him by law.
The reservation by the settlor of certain rights and powers, and the fact that the trustee may himself be a beneficiary, are not necessarily inconsistent with the existence of a trust.
The key characteristic of a trust is that it permits the separation of legal ownership and beneficial interest: the trustees become the owners of the trust property as far as third parties are concerned, and the beneficiaries are entitled to expect that the trustees will manage the trust property for their benefit.
Trusts are either express trusts (that is, a trust created intentionally by an act of the settlor), or trusts imposed by law. There are three types of trust that are imposed by law: