Trusts

What is trusts? 

Trusts is the tripartite relationship among the Donor/Settlor, Trustees and Beneficiaries.

Donor/settler

As far as law of trusts is concerned, the term ‘settlor’ or ‘donor’ are used interchangeably to mean the same thing. the term donor has no technical legal meaning, it literally means ‘giver’. Therefore, a donor is a person who gives his property or capital to trustees to hold for the benefit of beneficiaries.

Trustees

These are people appointed by the donor to hold property or capital for the benefit of the beneficiaries.

• Beneficiaries

These are people to whom the donor invest his/her property to the trustees for the benefit of the beneficiaries

The Nature of Trusts

• Is a trust legal person? Basically, trusts as pointed out earlier is a tripartite relationship among the donor/settlor, trustee(s) and beneficiaries.

• Therefore, trust is just an arrangement on how the beneficiaries can enjoy from the property vested to the trustees by the donor. However, once the trustees are registered they become body corporate having legal personality.

Important Documents and Registration of Trusts

• The organization which deals with the registration of trusts is Registration, Insolvency and Trusteeship Agency (RITA).

• The important documents in registering trusts are: Trust Deed and Trust Rules

NB: the students are required to be acquainted with the format of the Trust Deed and Rules

Advantages of Trusts

• It can be used to formulate a pension scheme such as NSSF and PSSSF.

• It can be used to formulate collective investment scheme such as Unit Trust.

• It can be used to formulate a collective security trust for holder of bonds or debenture stock.