What is a trust?
A trust is a legal arrangement where trustees hold and manage assets for the benefit of beneficiaries, following the terms set by the person who created it (the settlor). Trusts are used to protect assets, provide for children or vulnerable people, control when and how beneficiaries receive money, and for some tax planning. They can be set up during life or created by a will.
Detailed explanation
Three roles define every trust:
- Settlor — the person who puts assets into the trust.
- Trustees — the people who legally hold and manage those assets.
- Beneficiaries — the people who benefit.
Common types include bare trusts, discretionary trusts and life interest trusts, each with different control and tax treatment.
Grandparents set up a trust for their grandchildren's education. They are the settlors, two trusted relatives are the trustees who manage the money, and the grandchildren are the beneficiaries who benefit when the trustees decide.
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Sources
- GOV.UK — Trusts and taxes
- GOV.UK — Types of trust
- Trustee Act 2000 — legislation.gov.uk
- Reviewed by
- ClearLegacy editorial team
- Last reviewed
- June 2026
- Next review
- December 2026
- Jurisdiction
- England & Wales
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