To create a trust, a person (the settlor) gives money or property to another person (the trustee), to be held in trust for the benefit of either the trust's beneficiaries, or a purpose recognised by law. There should be a signed trust deed (agreement) that acknowledges the settlement, but it is possible to establish a trust verbally.
The trustee holds the trust 's property in trust for the beneficiary, and administers or manages the trust. A trustee includes an executor or administrator of an estate, which may be the Public Trustee or the Maori Trustee. Companies may also act as trustees.
A settlor of the trust is any person who directly or indirectly does any of these things, or who has done so in the past:
- disposes of any property to the trust for less than its market value
- makes property or funds available to the trust (or for its benefit) for less than market value
- provides services to the trust for less than market value
- acquires any property or service from the trust for greater than market value.
- Trusts may also be settled by companies.
A settlement is any action that makes a person a settlor of a trust. This includes any failure to act, and entering into any transactions that are part of one of the actions listed above.
Courtesy of IRDÂ