A trust is a relationship established pursuant to a document known as a trust deed, whereby one person (the settlor) conveys an asset to others (the trustees) to hold and manage that asset on behalf of certain other persons (the beneficiaries).
In this video we discuss:
- Trust deeds
- Legal entity status
I am Matthijs van Gaalen and I'm a corporate / commercial lending lawyer at Gowling WLG and you're watching video six of our video series entitled different types of borrowing entities. In this video we're going to review trusts.
A trust is a relationship established pursuant to a document known as a trustee whereby one person the settler conveys an asset to the others the trustees to hold and manage that asset on behalf of certain other persons, the beneficiaries. So there's the settler the trustees and the beneficiaries.
As a trust is a relationship and not a distinct legal entity it can only act through its trustees. The power of the trustees to act is governed by the trust deed so whether it's a trust for family trust estate planning purposes or business trust used for corporate tax planning purposes, a trust tends to be a very complicated arrangement where legal counsel is required to structure the loan and security documents.
Every trust is different and each transaction will involve a review and analysis of the trustee to look for things like one the transfer of the assets to the trustees two the ability and the authority of the trustees to enter into any loan transaction and to grant any security documents three confirm the powers of the trustees and four identify the appropriate borrower.
In most cases the board will be the trustees themselves acting as trustees on behalf of the trust so just to recap trusts first trusts are formed by a custom trustee second trusts are made up of a settler trustees and beneficiaries third trusts aren't a distinct legal entity fourth powers of the trustees are established but also limited by the trustee and fifth and finally a legal review is almost always required.
This presentation was a high level overview on trusts however if you find that you have more specific questions about any of the points discussed or their application to a specific situation please reach out to any member of our lending team or you can also contact me.
Thanks for watching.
Read the original article on GowlingWLG.com
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.