Settlor / Trustee / Beneficiary/ Protector

In plain words

A classic trust has four roles. The settlor is the person who transfers assets into the trust and sets its terms. The trustee becomes the legal owner of those assets but must manage them solely in the interests of the beneficiaries and according to the rules set by the settlor.

The beneficiary is the person for whose benefit the trust is created: they receive income, assets or other benefits on the terms set out in the documents. The protector is an additional figure of oversight: they do not manage the assets but may approve the trustee’s key decisions, replace the trustee or hold a right of veto on important matters.

The point of the structure is the separation of legal ownership and economic benefit. That is why trusts are used for asset protection and succession planning. But the modern context is important: beneficial owners are disclosed to regulators and banks, and your country of tax residence may view the trust under its own rules. It is a lawful instrument, but not an instrument of invisibility.

Where these roles are encountered

Who is responsible for what

How the structure is built

1. 01Define the purpose of the trust
2. 02Select the trustee and jurisdiction
3. 03Draw up the trust documents
4. 04Transferring assets
5. 05Management and reporting

What you need to know

• The trustee is the legal owner but acts in the interests of the beneficiaries
• The settlor loses direct control after transferring the assets
• The protector is a mechanism of oversight, not management
• Beneficial owners are disclosed to regulators and banks
• Your country of residence may characterise the trust in its own way

Common mistakes

• ✕Creating a trust to make ownership opaque
• ✕Keeping actual control contrary to the structure
• ✕Not taking into account the tax regime in the country of residence
• ✕Choosing a trustee without checking their reputation
• ✕Not setting out the protector’s powers

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