• Explain And Explain The Difference Between Settlor And Trusteees

A trust is a legal arrangement created when one party places assets under the control of a second party for the benefit of the third party. The assets that are transferred become property of the trustee and holds the assets on trust for the beneficiaries. (Gitman, L., 1981) Hence, the trustee is the nominal owner of the property and has a legal obligation on the property set out in the trust deed. A trust is composed of four basic elements. The grantor, the trustee, the beneficiaries and the trust document. The grantor,also known as the settlor, is the one who creates the trust and supplies its assets. The settlor must be an adult and be of sound mind. He may be a company or even another trust. The settlor may also be a beneficiary of the trust.

(Leuterio, M. & Estepa, C., 2009) The trustee is an individual or legal entity to which the settlor transfers full authority of the assets. A minor can be a trustee, but the court would have to appoint someone to take a control of the assets temporarily until the minor turns 20. The beneficiary is the third party who benefits under the trust. There can be more than one beneficiary depending on the choice of the grantor, he may even include unborn beneficiary. Beneficiaries may be individuals or entities. (Rana, B., 2007) The main purpose of trusts is to ensure that the beneficiaries receive some kind of benefit without actually owning the assets themeselves. The trust document, also called a declaration of trust or a trust instrument, is a legal document that establishes a trust. It consists of the name of the grantor, the trustee and the beneficiary, it should also list the date of its establishment. A trust document may be "stand-alone," as with a living trust, or its term maybe included in the terms of the last will and testament of the grantor. (TOAP, 2015) The trust document must be signed by the grantor. Witnesses are required if the terms of the trust are contained in a

There are two basic types of trusts: living trusts and testamentary trusts. A living trust or "inter-vivos" is a trust that is established during the person's lifetime. While a testamentary trust is a trust that is established in a will and will only take effect upon the death of the trustor. (Clendinin, J.C., 1969) There are two kinds of a living trust: revocable living trust and irrevocable living trust. A revocable trust is a type of trust in which the grantor has the right to alter, change or amend the terms and conditions of the trust or terminate within his sole discretion. A revocable trust typically becomes irrevocable once the the grantor dies. Trusts that cannot be altered, change, modified or revoked are called irrevocable trusts. Once the property is transferred to an irrevocable trust it can no longer be taken back by the grantor from the trust. (Mayo, H., 2006) Though the trust is irrevocable, there are certain exceptions that allow the beneficiary or the trustee to modified the trust as for causes prescribed by law. Other types of trusts include reversionary trust, life insurance trust, dry trust, step-up trust, genration skipping trust, sprinkling trust, incentive