A declaration of trust, sometimes known as an “express trust”, is a legal document designed to protect your interests when it comes to managing assets. Whether you own property in multiple countries or have investments that you want to protect, having a declaration of trust can help make sure that your financial interests are taken into account.
To create a declaration of trust, there are certain components that must be included in the document. These key components are outlined below:
The Settlor
The settlor, also known as the trust creator, is the individual who initiates the trust by drafting and executing the declaration of trust. This legal document outlines the terms and conditions of the trust, including who will benefit from its assets and how it should be managed. The settlor assumes the responsibility of ensuring proper administration of the trust, including appointing trustees and overseeing their actions to safeguard the interests of the beneficiaries.
The Trustee
The trustee, as the legal entity entrusted with the management of the trust, plays a crucial role in ensuring the effective execution of all its provisions. This encompasses a wide range of responsibilities, including the meticulous distribution of assets, strategic investment of funds, meticulous filing of tax returns, and diligent fulfillment of all other necessary duties to accomplish the trust’s objectives.
Beneficiaries
Beneficiaries are the people who will receive the assets in the trust. This could include family members, charities, or other organizations. The settlor typically names the beneficiaries in the declaration of trust and sets out how much they are entitled to receive from the trust.
Assets
The assets held in a trust can vary greatly depending on what is included in the declaration of trust. Regardless of what type of assets are held in the trust, they must be clearly stated in the declaration. This includes items such as stocks, bonds, real estate, personal property, and other valuable possessions. It could encompass investments in various financial instruments like mutual funds, retirement accounts, or even intellectual property rights. Additionally, valuable collections such as artwork, antiques, and jewelry may also be part of the trust’s assets. The breadth and diversity of assets held in a trust ultimately depend on the preferences, goals, and circumstances of the grantor, with the aim of safeguarding and managing wealth for the beneficiaries.
Investment Powers
The trustee is responsible for managing the trust’s investments. The investment powers included in a declaration of trust dictate how the trustee should invest and manage the trust’s assets.
Distribution of Assets
The declaration of trust must include provisions for how assets will be distributed to the beneficiaries. This includes when distributions can be made, who is entitled to receive them, and how they are allocated.
Having a declaration of trust in place is an important step in protecting your financial interests.
It’s important to talk to a financial advisor who can help you create a declaration of trust that meets your specific needs. An experienced professional will also be able to provide guidance and advice on all aspects of setting up and administering a trust.
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This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of the author, and not necessarily those of Raymond James. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decision. This material is for general information only and is not intended to provide specific advice or recommendations for any individual. Financial and investment planning inherently involve potential tax and legal implications, with which we are generally familiar. We do not, however, practice as lawyers or CPAs and cannot give specific legal or tax advice. You should always consult with your tax advisor, or your attorney, when making complicated legal or tax decisions, however, we’re glad to work with your tax or legal professional to help you meet your financial goals. Raymond James financial advisors do not render advice on tax or legal matters.