Settlor
The person who creates a trust and transfers assets into it. In will trusts, this is the person who died (testator).
A settlor is the person who creates a trust and places assets into it. They decide:
- What assets go into the trust
- Who the trustees will be
- Who the beneficiaries are
- The terms and conditions of the trust
Settlor in Different Trust Types
Lifetime trusts: You create the trust while alive, transferring assets immediately or over time.
Will trusts: You create the trust in your will. It takes effect on your death, and you're the settlor even though you've passed away.
Settlor's Rights and Restrictions
Once assets are in a trust, the settlor generally loses control over them. However:
- The settlor can reserve powers in the trust deed
- They can be a beneficiary (with tax implications)
- They can be a trustee
- They cannot usually revoke the trust or take assets back
Tax Considerations
If the settlor benefits from their own trust, special tax rules apply. The trust's income and gains may be taxed as if they were the settlor's.
Common questions
Can the settlor change a trust?
Generally no, once created. Some trusts include power of amendment, but this has tax implications.
Can the settlor be a beneficiary?
Yes, but "settlor-interested" trusts have different tax treatment. Income is taxed as the settlor's.
Can there be multiple settlors?
Yes, for example both spouses could create a joint trust, each settling their share of assets.
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