Trusts today still play a vital role in asset protection, asset management and estate planning. At its core, a trust involves several roles each playing a key part in running a trust smoothly, like a well-captained sports team. The key roles include:

The Settlor: the ‘head coach’ of the trust. The Settlor creates the trust and transfers assets into it. They establish the trust’s terms, decide who the beneficiaries and the trustees are, and outline the reasons for the trust. Their intentions shape how the trust operates moving forward, and usually, they retain some input in running the trust.

The Trustees: the ‘forwards’ of the trust. These people (or companies) are responsible for managing the trust’s assets – usually according to the Settlor’s wishes, but they have duties to follow the trust deed’s terms and the provisions of the Trusts Act 2019, to act properly, honestly and in good faith to further the trust’s purpose. Unless otherwise stated, they must also act with a general duty of care, invest prudently, not self-benefit, avoid conflicts of interest, and act impartially, among other duties. The Trustees must be trustworthy, as they hold ‘legal’ ownership of the trust assets and responsibility for proper trust management going forward.

The Appointers: the ‘captains’ of the trust. The Appointers have ultimate control over a trust, as they can appoint and remove trustees. If a trustee dies, loses capacity, or acts against the beneficiaries’ best interests, the Appointers can remove them and bring on replacements. The Appointers oversee the trustees’ actions and make sure the trust is running properly according to the Settlors’ wishes, the trust’s terms and the Trusts Act. In this way, they add further security to the trust.

The Beneficiaries: The “impact scorers” of the trust – the people or entities that receive the benefit of the trust fund. Discretionary beneficiaries have a hope or expectation to benefit from the trust (through income or capital) during its lifetime; final beneficiaries have a vested interest in the trust assets once the trust finishes. Unlike an estate, beneficiaries can continue to receive trust assets long after the Settlor has passed away. Beneficiaries now have more rights under the Trusts Act, including a presumption they will receive basic trust information, and further information on request. They can challenge the trustees’ actions.

Each role is distinct, and clarity can prevent misunderstandings and legal disputes – but it is rarely straightforward. These roles can conflict – a trustee can also be a beneficiary, which can create conflicts of interest or self-benefitting. Each role must be distinctly understood, to avoid complications and ensure proper administration.

If you are unsure whether the roles in your trust are clearly defined and understood, contact CS Law on 06 368 9239. We are here to look after you, your family, and the small print.