Rights relating
to Trusts

Rights relating to Trusts

The individuals who are engaged in a trust may be broken down into three primary roles: the settlor, the trustee, and the beneficiaries. The settlor is the person who creates the trust. The person who establishes the trust and moves their assets into it is referred to as the settlor, but they may alternatively be referred to as the settlor or the grantor.

Settlor’s position

The settlor is the person that creates the Trust and sets its content. The settlor decides the form of the trust, the beneficiaries and their interests and the trustee and their obligations. Before the creation of the Trust, the settlor must be the absolute owner of the property in question. He must hold the legal and beneficial ownership of the property. Once the Trust has been created, the settlor loses both the legal title and the beneficial interest. Once the settlor has determined the terms of the trust and transferred the property, he is unable to revoke the trust. He no longer enjoys any rights unless he has made provision.

Trustee’s position

The Trustee receives the burden of managing and administering the property under the trust for the benefit of the beneficiaries. Between the trustee and the beneficiaries there is a fiduciary relationship that basis on confidence, trustworthiness to act for the benefit of the beneficiaries and not for its own benefit. The trustee’s administrative functions are really concerned with looking after the money. If it were a fund, this would include investing and re-investing the money. If it is a single item, the trustee must ensure proper state of repair and so forth. The trustee’s dispositive responsibilities refer to making transfers and payments to the beneficiaries.

Beneficiaries’ position

Beneficiaries have equitable rights in the property and a beneficial interest in it. Beneficiaries may sue the trustee and any third party for damages for breach of Trust. They can get the property itself back or whatever has been substituted for, even if given to somebody else. Beneficiaries are entitled to assign the whole property or part of it to third parties. They may also terminate the trust by requiring the trustee to transfer the legal title of the property to them.

The nature of the beneficiary’s rights

Personal and proprietary interests: In an example of the simplest type of trust a bear trust, where there is one beneficiary. Here the trustee function is to look after the trust property until it is ready to be transferred to the beneficiary in accordance with the trust instrument. In this type of case the nature of the beneficiaries’ interest is one which is a form of ownership of the trust property. The beneficiary is said to have a propriety interest in the trust property.

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