A Trust may exist in a variety of circumstances. The Trust can be created during the lifetime of the Settlor or by way of a will. In the latter case, the Trust will come into effect upon the Settlor’s death. Through a private agreement which is called the ‘Trust Deed’ the Settlor grants powers to the Trustee on matters concerning the administration, management and disposition of the Trust Property.
The Trust may be ‘Fixed’ or ‘Discretionary’. In the former, the Settlor gives the Trustee specific instructions as to how to administer and distribute the Trust Assets.
This may be carried out through a mandate by the Settlor or through advice which is provided by the Trustee as to what it is deemed to be the best manner to manage the Trust Assets. In the latter, the Settlor may give the Trustee discretionary rights as to how to manage, administer and dispose of the Trust Assets. In this case the Settlor may give guidance to the Trustee through what is called a ‘Letters of Wishes’.
The Trustee cannot appropriate himself of any assets held under trust. The Trust Assets are kept separate from any other property owned by the Trustee.