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HMRC internal manual

Trusts, Settlements and Estates Manual

Legal background to trusts & estates: setting up a trust

When a trust is set up, the legal interest (TSEM6018) of assets passes to the trustees. The equitable interest (TSEM6018) passes to the beneficiary.

The property that a settlor puts into trust is called

  • the trust fund, or
  • the corpus of the trust, or
  • settled property.

The trust property does not pass to the settlor’s personal representatives when he dies.

Trustees hold the assets in a fiduciary capacity in accordance with

  • the terms of the trust
  • the relevant statutory provisions.

This means they must exercise rights and powers in good faith for the benefit of beneficiaries.

A testator can set up more than one trust in a will. These trusts can be for the benefit of various people, not necessarily the testator’s family.