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Settlor

Discussion in 'Investing Glossary' started by Glossary, 27th Sep, 2006.

  1. Glossary

    Glossary Active Member

    Joined:
    12th Sep, 2006
    Posts:
    25
    Defintion:

    The party to a trust deed who gifts or "settles" the initial trust property on the trustee to hold on trust for the beneficiaries.

    Making the gift is the sole role of the settlor, after which they have no further involvement in the trust. It is critical that the settlor is not a beneficiary under the trust otherwise the trust is likely to be held invalid.

    When establishing your trust the settlor may be your lawyer or accountant but it is probably better practice for a family friend to act as the settlor as they will have a genuine reason (i.e. affection) to be making the gift.

    Typically the "settlement sum" is $10, but it could be any amount and need not be cash - it could be some form of valuable property.

    There are significant legal and tax implications arising from formation of a trust, so please see your legal and financal advisers before establishing a trust.

    See also: