For many high net worth individuals, a major problem with the concept of a trust is the fear that by transferring their assets to trustees, they will lose control over those assets.
Some of the ways in which a trust can be defined do not help as they stress the importance of the transfer to and then the holding of property by a trustee for the benefit of certain persons or for certain purposes, but frequently make little or no mention of any role which the settlor or his or her advisers can play after the trust has been established.
While it is certainly the case that the creation of a valid express trust will require the transfer of ownership of trust property to a trustee, to be held by that trustee for the benefit of beneficiaries or for stated purposes, that does not mean that the transfer is an absolute gift leaving the original donor with nothing more than the hope that the trustees will deal with the assets in accordance with his or her wishes. Trustees are subject to onerous duties set out in trust legislation and in the trust deed or other written instrument. When giving instructions for the creation of a trust, the settlor can and should play a significant role in stipulating the powers which the trustee is to have and how those powers are to be exercised.
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Paul Matthams is a partner at Carey Olsen in Jersey