Trust Registration

Trust, Settlor and Beneficiary

A trust is a depositary contract in which one party (the trustor) grants another party (the trustee) the authority to hold title to personal property for the benefit of a third party (the beneficiary). Read this blog to learn about trust, settlor and beneficiary.

At its most basic level, a trust is a depositary association in which one party or individual, known as the trustor, grants another party or individual, known as the trustee, the authority to hold title to real estate or other personal property for the interest of a third party, known as the beneficiary. 

Trusts are created to protect the trustor’s property from creditors, ensure that the property is distributed per the trustor’s desires, save time and money by reducing paperwork, and, sometimes, avoid taxes. 

This article will discuss everything about a trust, settlor and a beneficiary. So, keep reading if you are interested in learning about the same. 

What are the Categories of a Trust?

Trust is classified into six broad categories:

  • Living
  • Testamentary
  • Funded
  • Non-funded
  • Revocable
  • Irrevocable.

What is a Deed of Trust?

A Trust Deed is a legally binding agreement between a lender and a borrower to transfer property ownership to an impartial third party who will act as trustee. The trust arrangement is bound by informal paperwork known as the Trust Deed.

The management and distribution of a person’s financial assets can be governed by a trust, either during their life or after their demise.

Who is a Settlor?

A Settlor is a party or an individual who creates the trust by transferring a specific asset that they own to another person or party known as the trustee with clear instructions that the property be managed for the benefit of a third party. The settlor can be an ordinary citizen or a legal entity. 

The trust settlor may also be referred to as a grantor, donor, or trustor. No matter what name is given to this individual, the law requires that ownership of an asset be transferred to a trustee, who oversees it for one or multiple beneficiaries who ultimately benefit from it. In some trusts, a settlor may also serve as the trustee, the beneficiary, or both.

Who Can be a Settlor?

Even though different state requirements vary, in general terms, any person at least 18 years old and of sound mind has the relevant legal opportunity to create a lawful trust.

Who is a Trustee in a Trust Deed?

A person who holds the assets in the beneficiary’s best interest is the trustee. A trustee is an individual or entity who manages and holds the property and assets on behalf of another individual or entity. A trustee may be appointed for a wide range of goals, for instance, in the event of a bank loss, for a donation, for a trust fund, or for specific types of retirement plans or pensions. 

Who Can be a Trustee?

A trustee may be appointed from any internal members or associates, author, professionals like accountants or attorneys, a group of banks or a trust firm, or any combination of these people.

What Does a Trustee do?

Here are a few things that a Trustee is responsible for – 

  • Notifies bank and other parties
  • Keeps proper secretarial records
  • Looks after the conservation of any minors and children
  • Arranges a team of consultants
  • Acknowledges insurance aids and restrictions
  • Handles necessary businesses
  • Swears for disability welfare.

Although the trustee has complete control over the trust’s assets, they are under a legal obligation to manage them as efficiently as possible to benefit the beneficiaries. The trustee is barred from utilising the trust asset for personal gain.

Who is the Beneficiary or the Third Party who Receives the Benefits?

The Beneficiary is a third party or a person for whom the trustee determines and oversees the trust asset’s profit and earnings. A beneficiary gains a benefit or profits out of something. An entity qualified to receive benefits from a trust is commonly referred to as a beneficiary in the financial industry. 

Beneficiaries are those listed explicitly in these agreements or who have fulfilled the requirements that qualify them for the established distributions. The Beneficiary or Beneficiaries could be identified in the Trust Deed or may otherwise be a properly outlined group of individuals. The trust settlor can also be referred to as the Beneficiary (who receives benefits in the end).

Why Should one Select a Beneficiary in Trust?

Here are two reasons why beneficiaries should be appointed. 

Speed up the Process

Appointing a beneficiary can speed up the process in two ways;

  • The method of allocating assets after the author’s passing gets quickened by maintaining a beneficiary. 
  • Getting assets as a beneficiary may be more convenient and long-lasting than waiting for the leave process to be completed.

Acquire Clarity

By designating a beneficiary, you determine who should inherit your assets and possessions if you pass away.

Can a Person be a Settlor as well as a Beneficiary?

A settlor can be a trust beneficiary but not the sole beneficiary; otherwise, there is less chance of the trust being established in the first place. There is simply no logic for creating a trust if no other party is involved because a trust’s fundamental purpose is to hold the asset or property for the benefit of another person.

Can a Person be a Settlor as well as a Trustee?

Yes, a Settlor can also serve as a trustee of a trust. In some forms of trust, the settlor could also serve as the trustee, the beneficiary, or both. It is a joint arrangement, for instance, when married couples have a trust jointly.


A trust can govern the management and distribution of a person’s financial assets, either while the individual is alive or after they have passed away.

One can use a trust to support a beneficiary who is underage (less than 18 years old) or has a mental illness that may impair his capacity to manage funds. It will be given to the beneficiary whenever it is thought they are competent to manage their finances.

However, trusts have the disadvantage of taking time and money to establish, and they cannot be dissolved or taken back quickly. Vakilsearch is here to help you. If you are thinking of obtaining or revoking a trust, we can assist you in achieving the same.

Get in touch with Vakilsearch now and get the assistance of our professional team at reasonable prices!

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