Offshore Trust Glossary

Offshore Trust Jargon-Busting

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Beneficiary - someone who benefits from the assets held in a trust.

Estate - all of the property and possessions of the settlor.

Fiduciary - relating to the practicalities of trust management. A person appointed to a position of trust to manage assets for the benefit of another person.

Letter of Wishes - a directional letter from the settlor expressing a wish as to how a trust's assets should be disbursed. A letter of wishes is not binding on the trustee whose discretion is sovereign.

Life Tenant - a beneficiary of a trust receiving a fixed income - for life.

Probate - the legal process whereby the validity of a Will is established.

Protector - a guardian whose job is to ensure the trustees carry out the wishes of the settlor. The protector has veto over specific trustee powers and the trustees cannot exercise certain powers without the protector's written consent. The protector can also remove trustees and appoint replacements.

Settlor - the person who establishes the trust, handing over ownership of its assets. There may be more than one settlor.

Trust - defined by HMRC as 'an obligation binding a person called a trustee to deal with property (assets) in a particular way (that is, in accordance with the trust deed) for the benefit of one or more beneficiaries.'

Trust assets - everything held within the trust.

Trust deed - a legal document identifying the parties to the deed, namely the settlor, the trustees and the beneficiaries. It also indicates the initial assets (known as the property) of the trust, usually referred to as the Trust Fund.

Trustee - could be an individual such as a friend, family member or business associate or a financial/ administrative specialist, such as a lawyer, banker or investment manager or, alternatively, a company or corporation such as a bank, to whom legal ownership of the trust's assets is transferred. A trustee manages, invests and distributes the assets in accordance with the trust deed.

Trust Period - defines the life of a trust. Charitable trusts may run in perpetuity. Others generally have a life period of between 80 and 150 years.

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