A trust is a legal relationship under which one person, known as the Settlor, places property under the control of another person, known as the Trustee, to hold and administer for one or more Beneficiaries or for a specified purpose.
In common law jurisdictions (such as England & Wales, Cayman, DIFC and ADGM), a trust is not a separate legal entity. It does not have shareholders or directors. It cannot hold assets in its own name. The Trustee is the legal owner of the trust property and must deal with it in accordance with the trust terms and the duties imposed on the Trustee by law.
The trust arrangement will usually be recorded in a trust deed. The deed can identify the governing law of the trust, the Beneficiaries or purposes, the Trustee’s powers, distribution arrangements and any additional roles such as a Protector.
For example, a parent may transfer shares in a family holding company to a Trustee. The Trustee becomes the registered shareholder. The trust deed determines who may benefit from the shares, dividends and sale proceeds and how the Trustee may exercise the rights attaching to those shares.
ADGM and DIFC
Trusts are recognised in both ADGM and DIFC. Trusts cannot be registered in either jurisdiction but the trust deed can specify that the trust will be governed by ADGM or DIFC law.