Roles and responsibilities

Trusts and estates both manage property for the benefit of other people.

Trusts

A trust is not like a company. It’s a legal arrangement where someone (the settlor) gives property to someone else (the trustee) to manage for the benefit of another person (the beneficiary).

When the settlor hands property over to the trustee, the ownership of the property passes from the settlor to the trustee. The settlor has no further claim on the property ─ unless they are also a trustee or a beneficiary.

A settlor can be a trustee and a beneficiary of the same trust, but not the only trustee and beneficiary.

The transfer of ownership from settlor to trustee is an important feature of trusts. Settlors can use trusts to protect themselves from people wanting to claim a share of their property.

Estates

An estate is the property that belonged to a deceased person at their death.

If there is a valid will, the person named to manage the estate is called the executor.

If there is no will, or the executor cannot carry out their duties, the court will appoint an administrator to manage the estate.

The individuals who receive the assets from the estate are called beneficiaries.